What does it mean specificly?

[microAmp]

What does it mean when a company says its going to business as 'asset light business model'? It's a semi-conductor company, not AMD or Intel.....

 

[kranky]

My guess is that they don't want to own any facilities or manufacturing plants. Subcontract as much as possible.

 

[linuxboy]

it's like kranky said.

When making strategic management decisions, management must decide the level of involvement the company wants in terms of size and operations. In effect, they need to place priorities and this is one way of doing just that. In using the asset light model, they are saying to everyone what their model is. For the shareholders, that means any profits will likely be paid as dividends and not heavily reinvested (due to self imposed limits in terms of asset growth). For employees, that means that many jobs will be service related and not ties in to company property. Avoiding assets means they don't have land/building hassle and they may opt to rent in order to write that off as a fixed expense and not as depreciation.

It's just a way which has its advantages and is used to align company vision with concrete practices.

Cheers !

 

[microAmp]

Thanks you two!