Answer to Question 2

Introduction

Having drastically affected the fundamentals of businesses all over the world, and having
caused unexpected bankruptcies of major brands, the Coronavirus pandemic is being
regarded as the 10th Black Swan economic event. The worst hit businesses currently are
travel and tourism, and these shall continue to face the onslaught for a considerable amount
of time in the future as well, or so long until a majority of the world population gets
vaccinated against the virus.

Asset Light Model – features

 It is a model of business wherein a business owns lesser capital capitals as

compared to the value of its operations.
 It is commonly adopted by a number of startups, which are focusing on owning the
operational part of their businesses and go for outsourcing when it comes to needing
any assets, for the purpose of faster vertical scaling and business expansion.

The article focusses on the benefits derived from the adoption this approach, which are –

 Increase in Value
Let us take, for example, any seller. If a seller can negotiate a deal with a contract
manufacturer for the shifting of the entire process of manufacture, instead of blocking
a considerable amount of capital in capital assets, it would definitely result in great
operational ease. However, given the economic disruption caused as a result of the
pandemic, Asset Light is not exclusive to manufacturing, warehousing, or logistics.
Even other areas of the value chain may extract benefits from the adoption of this
approach.
 Partnerships
An inconsequential yet important task for companies looking to revive their business
post the pandemic would be to analyze their product portfolios, the markets that they
operate in, and the existing state of operations – all for the purpose of determining
what sort of partnerships they should enter into for the betterment of business.
 There are lessons to be learned when companies form strategic partnerships
because they have to constantly resort to looking for workarounds to overcome
various barriers:
 Proper evaluation of products, demographics
 Proper weighing of benefits as against the risks to be taken
 Proper evaluation of accounting treatments so as to avoid any future
discrepancies
 Avoidance of unnecessary oversight, control mechanisms as these result in
major incremental costs

Submitted by: SAP Id: Roll No:

Rohan Vora 80203190182 C038