Latest news with #businessmodel
Japan Times
a day ago
- Automotive
- Japan Times
Scandals put Japanese nonlife insurers' business model at a crossroads
The nonlife insurance industry stands at a crossroads as it confronts the need to overhaul its long-standing business model. For nearly three decades, since the revision of the insurance business law in 1996, the sector has undergone steady deregulation. A series of recent scandals, however, has brought to light deeply entrenched and problematic business practices within the industry. As Japan moves toward an era of fairer competition, nonlife insurers now face pressure to reform their business structures and adapt to new market expectations. Before the law was revised, insurance premiums for major products, such as fire and automobile insurance, were set uniformly for all companies under government regulation. The system was intended to prevent excessive competition and potential bankruptcies. As a result, nonlife insurers were unable to differentiate their services through pricing. In this environment, companies instead focused on building stronger relationships with customers, sales agents and other business partners to remain competitive. Even after legal reforms allowed greater flexibility in product design and premium setting, restrictive business practices persisted in various forms, continuing to distort healthy competition. In June 2023, it was discovered that four major nonlife insurers had colluded to prearrange premiums when bidding for joint insurance contracts, in which a company secures coverage from multiple nonlife insurers. The scandal exposed a widespread industry practice in which the number of shares held in a corporate client played a key role in securing and retaining insurance contracts. It also revealed that insurers frequently provided excessive services, such as purchasing products from their clients, in an effort to win or maintain business. The following month, former Bigmotor, a major used automobile dealer and repair service provider, was found to have engaged in fraudulent insurance claims. In exchange for being assigned auto insurance contracts with buyers of secondhand vehicles sold at Bigmotor, nonlife insurers provided the company with excessive favors. They included referring vehicles involved in accidents to Bigmotor for repairs, purchasing vehicles with their employees' own money and assisting at Bigmotor's sales events. "Since insurance products lack patent protection and can easily be replicated, a unique and inefficient competitive structure has developed in the industry, making it difficult to eliminate the detrimental practices of competing in areas beyond core insurance offerings," said Satoru Komiya, chairman of Tokio Marine Holdings, during his term as president. In the wake of recent scandals, Japan's Financial Services Agency has repeatedly imposed administrative penalties on major nonlife insurance companies. These measures are intended to push them away from a relationship-dependent business model, which has become fertile ground for misconduct. In response to shifting market conditions, MS&AD Insurance Group Holdings is considering the dissolution of its dual-company structure for nonlife insurance operations. The holding company is discussing plans to merge its two key subsidiaries — Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance — which have operated separately since the 2010 business integration that formed MS&AD. Commenting on the proposed realignment, an industry observer noted that with competition intensifying, "the scale of business will become increasingly important in various respects." Japan's insurance market is contracting, driven largely by the declining national population. Furthermore, increasingly severe natural disasters and more complex risk factors are placing additional pressure on insurers. To remain competitive in this challenging environment, MS&AD President Shinichiro Funabiki stresses the importance of "strengthening capital so that a single company can take on large risks." Major nonlife insurers are seeking to differentiate themselves in their core businesses. They are developing innovative products that leverage artificial intelligence and big data, capitalizing on their economies of scale to gain an edge in the market. To strengthen the price competitiveness of their products, expand overseas operations and invest in new fields, companies will need significant capital, a reallocation of human resources and enhanced business efficiency. Tokio Marine aims to "strengthen its ability to provide solutions in areas such as disaster preparedness and mitigation that other nonlife insurers cannot easily replicate," Komiya said. More than a quarter century after the insurance industry was liberalized through legislative reforms, Japanese nonlife insurance companies are finally taking meaningful steps toward genuine competition.
Irish Times
a day ago
- Business
- Irish Times
Should VAT on hospitality be reduced? A cafe owner and an economist debate
Derek Bennett: I've run a cafe for more than 20 years - my business model is nearly broken There has been much recent speculation recently about the planned decrease in VAT for hospitality . The cost to the exchequer would be €545 million, assuming the reduction is applied only to food and not to accommodation . Many commentators have been asking where is the evidence that a decrease is needed. Firstly, I firmly believe the reduced rate should not apply to accommodation, as hotels use a dynamic pricing model which allows them to increase prices when they are busy. One argument against the reduction is that business systems could not cope with splitting accommodation from food to have two different rates, 9 per cent and 13.5 per cent. To me that is laughable: some hotels are already dealing with four rates: 0 per cent (for example, on takeaway coffee bags); 9 per cent; 13.5 per cent and 23 per cent (on alcohol and juices). Their powerful point of sale (POS) systems are well able to cope. READ MORE I own and have run a cafe in Dún Laoghaire for the past 21 years. My business model is nearly broken. To underline this point, my books show the increases we have had to deal with in 2024 and 2025. When customers say the costs of rent, rates and energy must be an issue, I explain they're not really the problem. My hourly employee costs annually are €220,000 for five to six staff on a day, including €25,000 of employers' Pay Related Social Insurance (PRSI). Materials costs are €125,000. VAT is €54,000. Rent is €33,000. Energy is €18,000. Rates are €6,000. Our sales prices are at the high end and we have over 1,000 customers each week, so it shouldn't be so onerous. By the end of 2025, material inflation will have increased by 10 per cent (an increase of €12,000 over two years); living wage by 20 per cent (€40,000 over two years); VAT by 50 per cent (€44,000 or €22,000 in each of the two years) and sick pay is up €4,000. All of this amounts to a total of €100,000. The last three items contributed €88,000 or 88 per cent of the increases, and were set by the Government. Now, while any increase in employee benefits is very laudable, there does need to be joined up thinking around whether this is sustainable, along with the other increases we face. Part of that thinking requires Government departments to work together to assess the implications. [ Does Ireland's hospitality sector really need a VAT cut? Opens in new window ] It appears that was not done, and as a consequence, the next planned increase in living wage is delayed, as is auto pension enrolment, which will add €5,000 annually. These delays have been welcomed in the industry. But there is an elephant in the room which no one involved in the process appears to have considered: Covid tax warehousing. My business made a loss during Covid. The only reason we survived Covid was the Government's support programme, including tax warehousing, which left me with a sum of €58,000 to pay over five years, starting in May 2024. That arrangement in the two years for which I have broken down figures will amount to €18,000, and will be €12,000 for each of the following three years. How are small, community-based hospitality businesses supposed to deal with that on top of the increases outlined above? So now I am paying an overall extra of €118,000 – which has been partly offset by a price increase to my customers of €18,000. Therefore, in the two years of 2024 and 2025, my final extra costs amount to €100,000. There are many small businesses across Ireland facing this situation. That, to me, is the justification for a return to a lower VAT rate on food. We need innovative thinking – for example, exploring the possibility of focusing the VAT reduction on small hospitality businesses with net sales of up to €750,000, thereby excluding hotels, international chains, and large businesses. The €545 million cost to the exchequer would significantly reduce and, according to a Freedom of Information (FOI) request I submitted, over 3,000 businesses would benefit. Derek Bennett is the owner of Harry's Cafe Bar in Dún Laoghaire, Co Dublin Barra Roantree: Cutting VAT would be expensive and economically illiterate The last few weeks have seen warnings about darkening skies on the economic horizon. We are told that deteriorating prospects and the possibility of a trade war instigated by the United States mean that the Government will deliver a ' much more cautious and restrained budget' this year than previously planned. Yet, an expensive and economically illiterate election pledge to reinstate a reduced 9 per cent rate of VAT on hospitality appears to remain on the table, recently elevated to a 'solemn commitment' by the Tánaiste Simon Harris. VAT is already levied on guest accommodation, catering and restaurant services at a reduced rate of 13.5 per cent rather than the standard rate of 23 per cent that applies to most goods and services. Figures from Revenue suggest this amounts to a tax relief of almost €2 billion per year and that lowering the rate to 9 per cent – as was temporarily the case from 2011 to 2019, and then again during the pandemic – would cost an extra €810 million per year. Excluding guest accommodation from the cut would slightly lower the cost (to less than €600 million), though it is not clear how feasible this would be. What rate would apply, for example, to a hotel package including dinner, bed and breakfast? The Irish Hotels Federation has renewed calls on the Government for a 'permanent restoration' of the 9 per cent VAT rate on the hospitality food services sector. Photograph: Getty Images Either cut would be expensive – costing more, for example, than lifting 55,000 children out of poverty; indexing tax credits and bands by forecast inflation; or extending the full-rate of Carer's Allowance to those currently receiving a partial payment or Domiciliary Care Allowance. The economic case for prioritising a VAT cut over these other commitments in the Programme for Government is exceptionally weak. This is reflected in the constantly shifting rationale provided by the sector for the cut: an evergreen response to whatever the issue of the day is. Previously it was to stimulate demand by reducing prices. However, both Irish and international evidence suggests that such cuts were pocketed by business owners with subsequent increases passed onto consumers in the form of higher restaurant and hotel prices. Now lobbyists for the sector claim a reduction in VAT is needed to preserve or increase profit margins, otherwise warning of 'another catastrophic year of shutdowns and job losses'. This is despite the fact the latest figures show there were 11 new companies incorporated for every liquidation in the sector, and that hospitality employment was 7 per cent higher in the first quarter of 2025 than a year earlier. Even if the sector wasn't booming, cutting VAT is a terrible way of supporting any businesses that may be struggling. That's because the largest share of the gains from a VAT cut go to businesses with the highest turnover: those selling at high volume and/or high prices. In other words, a VAT cut benefits owners of McDonald's and Michelin star restaurants more than a small cafe or restaurant. [ VAT rate cut for hospitality is back on the table - but will it be enough? Opens in new window ] If the Government and sector really believes that some smaller cafes and restaurants are struggling and deserve support, there are countless better ways to provide this. For example, the Government has previously paid a grant aimed at smaller hospitality businesses based on the size of their commercial rates bills, while long-delayed reforms to reduce litigation costs would help reduce insurance premiums. Given the availability of superior alternatives, competing priorities, and the worsening economic outlook, all that cutting VAT would achieve is to recklessly erode our already fragile tax base. Doing so would be the final nail in the coffin of this Government's claim to be responsible stewards of the public finances. Dr Barra Roantree is Assistant Professor in Economics and Programme Director of the MSc in Economic Policy at Trinity College Dublin
Skift
2 days ago
- Business
- Skift
Southwest Sets Date for Assigned Seating, Launches New Boarding Process
The moves come as Southwest has been making massive changes to its business model that include baggage fees and premium seats. Southwest Airlines announced Monday assigned seating will go into effect on January 27, 2026. With the new changes, Southwest also plans to use a new boarding process, bringing an end to its decades-long open boarding process, which had widely differentiated the airline from its competitors. Southwest said the new boarding pro
Forbes
15-07-2025
- Business
- Forbes
How To Compete When You're An Underdog
Christian Hyatt is the CEO and Cofounder of risk3sixty. As a cybersecurity expert, he has overseen more than 2000 engagements. Running an independent, self-funded business means embracing a different kind of challenge. Without the backing of outside investors or deep-pocketed funding, success depends on making smart, deliberate choices—investing in growth sustainably, building a strong team and focusing on long-term value over short-term hype. This kind of business model offers freedom—freedom to treat clients exceptionally well, to build a meaningful internal culture and to take risks based on values rather than investor expectations. It's part of what makes smaller, more agile firms stand out. But it also means operating as the underdog. Underdogs don't have the luxury of massive marketing budgets or the ability to burn through cash to dominate visibility. Larger, heavily funded companies can flood the market, grab attention and expand aggressively—regardless of whether they're profitable. Competing with that kind of presence is daunting. But while underdogs may never outspend the competition, they can outthink them. So, how do smaller players thrive in an industry dominated by giants? By being scrappy, creative and relentlessly focused on what truly matters—delivering exceptional value, forging strong relationships and staying nimble enough to seize opportunities the big players miss. 3 Ways To Win As An Underdog In 2020, we decided to start producing free content for cybersecurity and compliance experts. Our logic is that if we "give first," some of the folks enjoying our content will decide they want to do business with us one day. Since then, we have produced hundreds of videos on YouTube, hosted webinars every month, published hundreds of free guides and templates, created complete courses, spoken at dozens of conferences and more. It takes a lot of work to produce content consistently. Thousands of hours of effort. But we felt convinced that if we focused on serving the people in our community, we would eventually earn a few raving fans. Over 1 million people have viewed our content, and many of our sales prospects refer to our content while engaging with or using our services during the sales process. We made the first move, and a few people decided to do business with us. To be clear, I'm not saying that you need to start creating content. But you do need to think about how to give as much value as possible to the people you serve—and do it. Do it generously. With no strings attached. And eventually it will pay off. Underdogs that give the most win. The Cheesecake Factory has 47,500 employees and 213 locations. Their menu is a small book, they are located in prime locations and they have huge negotiation power with their suppliers. They have built a solid company. However, in Atlanta, there is a little Barbecue restaurant called Heirloom Market Barbecue. It's a single location—a hole-in-the-wall joint. But I'll be darned if that place isn't the first Micheline Star restaurant in Atlanta. So, what do they do that others can't? People: The two chefs in the back. Yeah, that's the owners. They are there every day. Heirloom has an elite staff that makes it run like a finely tuned machine. Process: Cooking process and recipes honed over a decade that result in a consistently great product. Technology: Fresh ingredients, wood-fired smoker built by the expert chefs who work the grill every day. They solve barbeque better than anyone. That same lesson applies to all the underdogs out there. You do not have the luxury of being like The Cheesecake Factory. Instead, you have to niche down. You have to have a singular focus on a single problem better than anyone else in the world. Niches are where underdogs win. I recently read a biography of Warren Buffett. What resonated with me about Warren Buffett is his long-term "buy and hold" investment strategy. That mindset allows you to make prudent long-term value decisions that directly benefit our most important stakeholders: our clients and our team. The funny thing is that kind of long-term thinking is out of style. It's almost old-school thinking. It flies in the face of all the headlines you see in the technology and SaaS space. All of the "Unicorns," the big rounds of investments and billion-dollar valuations we see in the tech space. But then I remember what Buffett said: "Time loves a good business." Now, don't get me wrong. I respect the founders out there who achieve "Unicorn" status. That is a fantastic accomplishment. However, I would encourage more of us to think of ourselves as an investment you "buy and hold." From my experience, the surest path to business success is doing the right thing consistently, for a really long time. To endure. The fact is that most folks aren't willing to do something that long and that consistently. Endurance and sustained discipline are hard. However, it all but guarantees success if you do. For Underdogs, time is on our side. And, I'll repeat it: "Time loves a good business." That's because, by necessity, we underdogs have finely tuned our business model for sustainability. It is in our DNA to run lean, serve our customers, serve our team members and earn a profit. Our culture tends to be genuine because it was forged over time, not purchased during the last round of funding. The result? Underdogs have the opportunity to be predictable, stable, value-based and consistent. The long road is where Underdogs win. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
Bloomberg
14-07-2025
- Business
- Bloomberg
‘The Turbulence Is Brutal': Four Shark Tank Businesses on Tariffs
For years, it was a winning business model: A startup in the US would have a clever idea for the kind of everyday product that everybody else wished they'd thought of first. The design and innovation were American, but the manufacturing was outsourced to a country with much cheaper production costs, such as China, Mexico or Vietnam. That model was a feature of many of the businesses that appear on the hit television series Shark Tank, in which entrepreneurs pitch their idea to a panel of potential investors. Landing a spot on the show has been a coveted prize for any small business given the visibility—and sales boost—it typically brings.
