A Study of No-frills Business Models
Date Issued
2008
Date
2008
Author(s)
Wu, Edward
Abstract
In the contemporary business world, there is an interesting yet unconventional form of business that has developed in the past decade: the emergence of no-frills services. More and more businesses are trying to escape the red ocean and enter into the blue ocean using the no-frills notion in order to capture the previously untouched market. It is believed that as the society morphs into the M-shape as described by Kenichi Ohmae, many businesses had to innovate new ways of conducting business in order to survive, and the notion of no-frills is one of them.any different no-frills business models are examined in the thesis, some in the same industry while others are not. Seven categories of businesses are covered, all manifestation of the no-frills businesses in their own ways. Each of them is carefully examined and studied, with the common themes within each categories summarized. The categories include supermarkets (Save-a-lot and ALDI), transportations (RyanAir and Megabus), fashion and living (H&M and IKEA), electronics (ASUS), rental spaces (EasyOffice and Cubic Boxes), hospitality (Cubic, EasyHotel, and Tune Hotels), internet cafes (EasyInternetCafe), and telecommunications. Three failed no-frills business are also studied, which includes two no-frills airlines and a no-frills cinemas.t is found that the common themes among all the businesses operate on are minimizing costs and maximizing utilization in order to pursue the price leadership strategy. Further observations are made on RyanAir and IKEA to determine the success factors and the sustainability of their successes. The question is not about how low the prices are, but rather what matters to the consumers most, and how the competitive advantages can be achieved and sustained. A generic framework has been developed in the end of this thesis from a strategic point of view to finalize on the concept of utilizing the notion of no-frills in future businesses.
Subjects
No-frills
Services innovation
Price leadership
Yield management
M-Shape society
Razor-and-Blade strategy
Type
thesis
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