RERMAG

Hollywood, the New Business Model

Sweating over the major merger trend? Well, MIT professor Thomas Malone says the next century could be a "golden age" for small businesses if they take notes from Hollywood. According to Malone, the Internet era provides huge - not to mention cheap - opportunities for small businesses. The key: outsourcing.

In the early days, Hollywood studios made movies under one roof. Today, they outsource to a myriad of creative freelancers and techies. Distributing work creates instant expertise and increases efficiency. The idea: Let people do what they do best.

A great tool for finding these individuals and communicating quickly is the Internet. the Internet itself is the perfect example of this type of decentralization. If the marketplace comes to mimic the World Wide Web, everyone will have his or her own little piece of the pie, according to Malone's theory. And for many contractors, rental is just such a form of outsourcing. But for rental to really take part in the revolution, a Web site seems to be the best means of connecting to the outsource trend.

Instead of wading through the murky mess of a 4,000-page catalog, customers of tool and parts distributor W.W. Grainger (www.grainger.com) can search through 220,000 products via the Internet in a fraction of the time.

Grainger, an old bricks-and-mortar company based in Lincolnshire, Ill., is an Internet success story. Not only does it expect to make $140 million this year, but the company also says that its Web customers are spending 20 percent more annually with the new system than they did before.

In fact, things have gone so well that Grainger is thinking about discontinuing its physical catalog altogether. Says president Don Bielinsky: "The Internet is clearly the best vehicle for our customers." Say goodbye to torn pages and coffee stains - the Web is here.

Today, 90 percent of U.S. Schools have Internet access, compared with 32 percent only three years ago. Source: Market Data Retrieval

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