Describe about the Sharing Economy for Sharing and Collaborative Consumption?
Economics is a subject involving the study of how goods and services are produced using resources that are limited or scarce. The goods and services produced should be used and distributed in the most optimum and efficient way. This approach creates additional value in the economy. The idea of sharing goods and services which are idle and not being used, in return for money or to serve a social cause is what is called ‘sharing economy’ (Belk, 2014).
Business is all about making money by satisfying needs of people. If an individual has something which is not being used all the time, then that article can be given on rent. Another person can make use of that product in exchange of some money. This is also called sharing economy. This concept has been becoming more popular in recent times because now technology is available which brings people together for sharing resources. The internet has helped to increase people to people contact. Now millions of people have smart phones. Websites and applications are available on computer and mobile phones through which the buyer and the seller can come into contact with one another on a convenient platform. There are people who are engaged in the work of bringing these buyers and sellers together. These people also make some money when a business deal is struck and implemented.
There are people who have empty rooms in their houses, which they are not using. These people are approached by other individuals and companies who have access to people who want to take rooms on rent for limited periods. These individuals or companies connect the two parties and rooms are taken on rent by the needy people. The company which connects the two parties also makes some commission or profit. This whole system is developed through people to people contact (Phelps, 2010). Large businesses have come into existence through small beginnings. This is all part of the shared economy. People take the initiative and get connected with other people to create business. In this case the relationships are more informal. The communication between different parties may also be more informal in nature (Prill et al, 2010) People also share other articles like cars and washing machines on rent.
One such example of business model developed on the concept of shared economy is that of Airbnb. Airbnb brings together people who want to give part or whole of their houses for rent to common people. It is a company which has grown tremendously by eating into the business of lower priced rooms offered by hotels. Many hotels had to lower their prices to protect their market shares. This has helped the consumers as prices in the entire market have come down. This way, sharing economy has ultimately helped the consumers. The idea has struck the right chord among the consumers who want to save money and at the same time get good services.
But it is not just the exchange of goods that creates value in the economy. Exchange of information which supports and encourages business can also take place. Such information exchange between the two parties relates to how the business is doing, what are the problems the two businesses are facing in general. This exchange of information is good for both business entities (Ley, et al, 2014). There can also be sharing of assets like office building for money or for a social objective of helping someone who is trying to run a start up business. The organization which provides the space to a budding entrepreneur might benefit in other ways.
In the same way, car pooling concept has also become popular. The governments and people in different countries have become more aware of the need to protect environment from pollution created by carbon emissions from cars. The vehicles have to adhere to certain norms regarding emissions. Therefore, it makes economic sense to share the same car for transport. There are companies like Uber which has come with the novel idea of sharing their customers with other companies, for a monetary consideration (Uber, 2016). It encourages people from different backgrounds to use their services in a group. The customers can get to the same destination in the same car. Such a transaction saves fuel expenses and people can share the car for lesser amount of rental expenses. The cost of running the vehicle gets divided among several customers. This is good for the society as a whole as fuel expenses come down and there is less pollution. The governments in several countries also support the practice of car pooling. Thus, the use of modern technology by the companies like Uber has changed the way how business is done. The companies have got more sophisticated in the ways they do their business. They have used technology to bring the costs down. Uber can think of more novel services for its corporate clients. It should offer services which are more innovative and save costs with added convenience. This way, there is less overlapping of services and lesser carbon dioxide emissions. This is a very good business strategy by Uber.
Technology has made it possible for individuals at distant places to share information almost instantly. Now people in different parts of the world can work on the same project and compare their research. They can share their ideas and suggestions through the electronic devices. Such individuals form virtual groups. The relationships among such individuals may not be so formal. They can be friendly with one another and share their thoughts freely, without any inhibitions. In this case an informal organization comes into effect (Godfrey, 2011).This results in the creation of goods and services and knowledge is shared and enhanced (Wang and Noe, 2010).
Also, there are people who want to contribute to the welfare of the community. There are some software professionals who develop software which can be used by the local government to provide some service to the community. Such software professionals may not charge anything for their services. This is also a very good example of sharing economy. People want to offer their services free of cost as they want to do some social service. The emphasis is more on developing relationships rather than making pure economic gains. People in this case want to be part of a group. This gives them immense satisfaction. They develop relationships with other people, in this way.
There are some business organizations which share their physical and human resources with other companies. They might be jointly working on a project. Sometimes defence organizations in different countries come together to develop a weapon system. In this case we might have engineers from different countries sharing their knowledge with one another. This exchange of information also comes under the concept of sharing economy. An organization may share blue prints of some systems it has developed with a friendly country working on the same project (Bachmann and Inkpen, 2011). The people to people relations also form the basis of such joint projects. The friendly relations between the countries lead to joint research and production of goods. There is lot of trust between organizations and people in such cases.
There are people who like to share their possessions, not just for earning money but also because it gives them pleasure. They feel more connected with the society when they share their belongings with others. Interpersonal relationships can be deeply satisfying. Businesses are built also on the basis of personal relationships. A network of people is built, leading to business transactions between them (Gronroos, 2011). People have succeeded in turning business ideas into successful business organizations. A small group of people starts a business and then scales it to become a huge organization. Innovative practices are brought into play and market shares are won and sustained. The business world is made dynamic through the efforts of such entrepreneurs who are bold, courageous and hard working. It is a case of people joining hands to create a business. They know how to make use of the latest technology to win customers. This is what has brought the concept of sharing economy which is here to stay.
Thus, this concept of sharing economy, facilitated by information and communication technology, has helped ease societal problems like hyper-consumption, pollution, and poverty by providing easy access to goods and services through economic coordination (Hamari, Sjöklint and Ukkonen, 2015). Motivated by sustainability, enjoyment and economic gains, people are increasingly adopting this concept and new start-ups based on this business model are continuously emerging. There are investors having faith in such business ideas who are willing to contribute millions as capital for such start up businesses. Such investors feel that they would get good returns on the money invested by them in the novel business ideas which are also good for the society as a whole. In other case, there might be better utilization of goods leading to income which otherwise would not have accrued to the people with spare goods. New job opportunities are being created as more businesses are being formed. People now are earning additional money. The prices of the goods and services have gone down with increased competition from these new players. Ultimately, it is also the consumers who have more choices and benefit due to reduced prices. The success of these enterprising business people has inspired many others to create new businesses.
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