So why form a consortium?
Benefits of consortium.
Reasons why organizations choose to work in a consortium include:
- Gaining access to markets that they cannot access alone (e.g. due to limited geographical reach, a limited range of products/ services, limited capacity of funds, and limited knowledge).
- Diversification – venture into trading of different products
- Reducing overhead costs – single importer vs. a group of importers
- Sharing risks and liabilities.
- Learning from each other and sharing complementary skills and expertise (e.g. by sharing staff, workforce development or impact measurement).
- Improvements to service quality and value for money (e.g. referring customers to each other’s complementary services).
- Developing new services through the creative interaction of ideas.
- Increased profile through shared marketing and being associated with a “new idea”.
- An increase in capacity enables strategic partnerships with large organizations because the consortium is big enough to be taken seriously.
- Increase in volume of the supply chain – more resellers for the products/services offered by the consortium as a result of combining each individual’s distributor database.
- Ability to penetrate more areas within a country.
- Possibility of monopolizing distribution or obtaining exclusive distribution for a range of products/services.
- Easy access to finance.
- Ability to grow resellers within the distribution chain.
- Create self-empowerment forindividuals wanting to transition from employment to business ownership.
- Attract better terms of payments and purchase costs due to growing business.
- Create a business-friendly ambiance and unity.
Disadvantages of consortia:
Any joint working brings disadvantages. For consortium these include:
- Direct costs: associated with set-up and operation.
- Opportunity costs: consortia take time to set up and operate.
- Delays: joint decision-making generally takes more time than making decisions alone.
- Reputational risk: each organization is, to an extent, trusting its reputation to others, if one fails that may reflect badly on others.
- The need to compromise – differing organizational values and cultures introduce tensions and fear of loss of independence.
Below is an extract from the message conveyed by Mawlana Hazar Imam on the occasion of Navroz on 29 March 2020 which reasserts the need for business unity within the Jamat:
“The world is facing a challenging time, and in these moments it is important that the jamat remains united and focused on helping those who will need assistance and hand-holding”
