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Let’s Start a Virtual Business

Westinghouse_digital_electronicsWestinghouse Digital  is not the same Westinghouse that made that room airconditioner Dad bought for us back in the 1950s.  Nope it’s a virtual company.  With annual sales of $650 M and just 120 employees, WD owns no manufacturing facilities and little or no ad budget, Best Buy and other reatilers do that for them.  Check out the article in the 2/26/07 Busines Week on page 50 or click on the URL at the start of this article to learn more.  Point is, this is the perfect example of Tom Friedman’s World is Flat.  The tvs can be assembled anywhere and UPS and Fed Ex stand by to ship.  So you are a virtual manufacturer with out the employees and trucks.  And guess what, the prices are lower which  is how they go into the top three.

Low price, quality, low cost, low ad budget, KACHING  goes the cash register.  This  is a great example of what Managerial accounting is all about. 

DLE

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2 responses to “Let’s Start a Virtual Business”

  1. Jason Raper Avatar
    Jason Raper

    That is one heck of job by this company to reduce overhead. Talk about the ideal cost model for your product. No assets to account for.
    Speaking of Fed Ex Ground. They are the only part of that company that is reporting a cosistent profit. What do they do? They make all of their contractors eat the cost. They truely set them up like a small business with retirement benfits, and help through outsourced CPA’s for their taxes. Some of the drivers own up to 10 routes, and can make an excellent income with very little education. Just a little input.
    Westinghouse’s website is one to be admired. You talk about design? It is very well put together.

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  2. Dennis Elam Avatar
    Dennis Elam

    Interesting, I did not know that about Fed Ex Ground.
    After exiting the catalog sales business, Sears came back with many of the folks that had been involved. you rent a store and as I understand it, Sears stocks it without a floor or financing charge. You then own a store that sells Sears tools and appliances which is to say everything these days. Again, a nice business model.
    Good point about the WDE site, it is well designed
    dle

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