McDonald's makes sure that it takes the best locations on the busiest highways, rather than settling for obscure secondary roads. Many smaller businesses have found themselves with (or made smart moves to secure) the ownership of valuable land adjacent to popular tourist sites. Pharmaceutical companies, such as Merck, own valuable patents giving some protection against rivalry - at least temporarily.
Relationships Over time companies can form valuable relationships with individuals and organisations that are difficult or impossible for a potential competitor to emulate. Relationships in business can be of many kinds. The least important are the contractual ones. The most important are informal or implicit. These relationships are usually based on a trust that has grown over many years. The terms of the implicit contract are enforced by the parties themselves rather than through the court - a loss of trust can be immensely damaging. It is in all the parties' interests to cooperate with integrity because there is the expectation of reiteration leading to the sharing of collective value created over a long period.
Buyer-seller relationships differ in quality. Many are simply arm's-length, adversarial and involve serious bargaining. This may make sense when selling incidental items, say pencils, to organisations. It is not worth the expense of establishing a more sophisticated interaction. However, many firms have seen the value of developing close relationships with either their suppliers or customers. For example, Ikea and Wal-Mart are moving towards more collabo-rative relationships with suppliers to improve delivery mechanisms, through joint planning and scheduling, information system management and co-operation on quality and reliability advances.
South African Breweries (now SAB Miller) has 98 per cent of the beer market in South Africa. It has kept out foreign and domestic competitors because of its special relationships with suppliers and customers. It is highly profitable, and yet for the last two decades it has reduced prices every year - the price of beer has halved in real terms. Most of South Africa's roads are poor and electricity supplies are intermittent. To distribute its beer it has formed some strong relationships. It helps truck drivers, many of whom are former employees, to set up small trucking businesses. Shebeens sell most of the.
The market, and is especially popular in less developed countries where personal incomes are low and cost control is a major concern for customers. In fact, prepaid is widely regarded as the innovation that has enabled the widespread adoption of the mobile phone in places with historically low telephone penetration like Africa and South America. While this is generally applauded as a step toward improving the digital divide, some observers are more circumspect about the long range in of prepaid on cultural development: The problem [of prepaid] can be summarized as one of Universal Joint Manufacturer in India apparent success in achieving short-term regulatory benchmarks for telecom access, but at a cost which may impinge future network access and development.
The view reflected in this remark is that while prepaid appears at first glance to be a silver bullet for achieving higher penetration of telephone service in devel-oping communities, it could allow policy-makers to skirt more difficult questions concerning the regulation of universal service obligations as a public good. Even in the advanced economies of the world, however, prepaid has also assumed a significant share of the total market for mobile phone service.
The figures from the Organization for Economic Cooperation and Development (OECD) show that as a percentage of total market share, the prepaid model makes up about 40 percent average in the OECD countries, dipping to about 2 percent in Finland and South Korea and peaking above 90 percent in countries like Mexico and Italy, Industry forecasts suggest that the market is not set to decline either, with one report forecasting that prepaid will achieve almost two-thirds of the global wireless market by 2009 - which translates to over a billion customers.