Rapid Scaling Of Business Using 5-STAR Business Network

Last updated on

May 20, 2021

Author:

chiefstaff

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In the aftermath of COVID-19 I have written a lot about the use of business networks in the times of business duress.

For example see these articles:

The above examples and data in those articles might lead you to conclude that strong business networks are useful only during times of duress and catastrophes. However, this is far from the truth.

In economic booms, whether accompanied by economic volatility, or economic stability, business networks allow you to realize higher profits, quickly. In fact the potential of your company's capabilities are multiplied many times over, perhaps by a factor of as much as 100 or more, by the leverage effect provided by your business network.

We discuss the leverage effect of the business networks and other key characteristics of the business networks in Chapter 3 of the book The 5-STAR Business Network.

Let us just consider a few simple examples here - the booming commodities industry. In the last 10 years no other industry has boomed as much as the commodities industry. Prices of iron ore, copper, coal, gold etc have gone up exceptionally during this period.

Within this industry, iron ore is one of the largest and most capital intensive operations - dominated by three global giants BHP Billiton and Rio Tinto of Australia, and Vale of Brazil.

In this scenario, to build a large iron-ore producer and exporter from scratch took Andrew Forrest of Fortescue Metals the full extent of his business network.

To raise finances, to build mining infrastructure, to build and gain access to the logistics infrastructure and to market the product in the international commodities trade, Fortescue Metals built a capacity in 3 years that many of its much bigger rivals would have taken more than 30 years to build.

This was only possible through extensive utilization of business networks that the company built, nurtured and managed effectively. Most executives grossly under-estimate the value and efficacy of the business networks in ramping up capacity rapidly in times of boom.

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