Advantages And Disadvantages Of Commercialization: Commercialization also known as commodification, is the assignment of commercial value to something which was previously valueless. Commercialization involves applying business methodology to something in order to gain profit. It is the exploitation of something for maximum financial gain. The concept commercialization seeks to transform something into a commodity; capable of being bought and sold, useful or valuable.
Commercialization is the totality of the act and process of introducing new product and or services into the market. The end point of commercialization is always to gain profit.
Every aspect of livelihood can be subject to commercialization. Common examples of commercialization includes: art, innovation, business experiments, government operations, etc. art is commerce. This is because every product of art could e subject to commercialization. The economy revolves around art, since art involves construction, production, designs, drawings, etc.
Innovation involves creation of new ideas or the refurbishment of already existing ideas. Innovations can always be commercialized as it is the concept that brings new products and services into the market.
Business experiments also revolve round commercialization. While business experiments are conducted, it creates possible discoveries and expansion of businesses which is an element of commercialization.
For government entities, they are generally regarded as nonprofit entities. This is because making profits is not their primary purpose. They are usually not profit driven or motivated, but basically operate for the welfare of the masses. Yet, commercialization is inevitable in the government sector. Government establishments can usually be subject to commercialization.
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Stages of Commercialization
Stages of commercialization includes: innovation, production, distribution and marketing, sales and profit, and customer support.
1. Innovation: This is the idea generation stage. Innovation is the act of introducing something new into a system by employing creative ideas. Innovation may be internal or external. When it is internal, it means that it is more a refurbishment. It is an advancement of an already existing establishment within an existing business or corporation.
When it is external, it is an entirely new establishment outside an existing business or corporation. Stages of innovation include: generation and mobilization of ideas, evaluation, conceptual analysis, experimentation, and implementation. Under this innovative stage, possible production of something new is strategized.
2 Production: Following the innovation stage is the production stage. Here, the new ideas so generated, evaluated and experimented are being put into actual production.
3. Distribution and Marketing: This involves the actual dispersal of the newly generated ideas which has been put into effect. It is under this stage that the new concept or product is popularized across to the target market.
4. Sales and Profit: This is the end point of commercialization. When sales and profit have been made, the commercialization process is said to be complete.
5. Customer Support: This is a measure for sustenance of a commercialized product. It involves guidance of customers in the use of the product, and establishing a link for getting customer feedbacks.
Advantages of commercialization
1. Job Opportunity: Commercialization helps in creating job opportunity. When new products and services are introduced, it creates an avenue for the requirement of manpower to carry out its process starting from introduction till the end process.
There are opportunities to engage marketers, distributors, analysts, agents, labourers, operators and many more. And when people accept and utilize the products and services, there would be created a need for more distributors and sellers. All these events points to one point; there would be more opportunities, including opportunities for self employment.
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2. Commercialization provides Solutions: Necessity is the mother of inventions. When there are needs and problems, the innovative sense of humanity becomes triggered to search and provide for solution. Solutions are never charged for free.
When a solution becomes successful, it would be commercialized to yield profit. But in all, a solution has been provided, and people would always be willing to pay for solutions.
3. Profit Making: The end point of commercialization is profit making.
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4. Commercialization Reduces Monopoly in Business: Monopoly in business is said to exist where there is exclusive provision of a particular product or service by a sole business or by one person. It is the domination of one or few brand or product in the market. Business monopoly is not always at fair play to customers.
This because there are just few options available to the consumers. Commercialization helps to cure monopoly and introduce new varieties for customers. It would be unsafe for commercial purposes to leave the fate of the masses in the hands of one or few business enterprise.
5. Commercialization Saves Resources and Expenditures for the Government: When private citizens are involves in commercialization, it eases the burden of development on the government.
6. Creation of Avenue for Healthy Competition: Competition in business is always encouraged as opposed to monopoly. When people venture into commercialization, there is always this spike on the already existing brands to keep working on their development. By this competition, industries work harder to be at the top demand by rendering the best quality services to the people.
7. Economic Development and Efficiency in Production: Commercialization contributes a great quota to the economic development of the state, since it involves every activity which is capable of being monetized. It develops the economy by ensuring steady availability of products, reduces importation, provides employment opportunities and sustains the value of the state currency.
Without commercialization, state currencies would have less value. This is because money is simply not a value itself but a means through which value is measured. When there are less available product and services, currency remains valueless, and that’s the economy devaluating. Because there is commercialization, productions of produces are continual.
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8. Provision of Wide Range of Option: By commercialization, the masses are open to wide range of option due to the continued need for innovations. There would be more available brands of products and services for people to consider.
Disadvantages Of Commercialization
1. High Cost of Production: Commercialization certainly requires a lot of economic input ranging from capital and other resources. Commercialists may find difficulties executing their smooth innovation due to the high cost of resources are material for its production. And when then production cost is high, the retail cost would be higher.
2. Commercialization is not Welfare Oriented but Profit Minded: Commercialization is basically concerned about its profit and not the welfare of the people. Its produce is better regarded as solutions provided in return for a pay.
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3. Uneven Distribution: There cannot be even distribution of products. Commercialization also encourages uneven distribution of wealth.
4. Redundancy: Innovation of machines for commercialization which is inevitable, may lead to the state of redundancy which is a state where employees are dismissed from their employment because they are no longer needed usually because machineries has taken over works which manpower would ordinarily do.
5. Irregularities: There could be a time where for one reason or the other, the production rate reduces. And when the production rate is reduced, there would be already established increased demand, and when demand increase, there would be possible increase in price of commodities and services. Amidst these irregularities, inflation may ensue.
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Commercialization can be spearheaded by either the government or private entities. Distinction must be made from commercialization and privatization. While privatization is the handing over of the management and control of government corporations to the private sector, commercialization involves yielding of profit out of a new or already existing entity which could either be that of government or private.
The clear distinction here is that commercialization is concerned with profit making. Commercialization must be encouraged because its advantages seem to outweigh the disadvantages.
Edeh Samuel Chukwuemeka ACMC, is a Law Student and a Certified Mediator/Conciliator in Nigeria. He is also a Developer with knowledge in HTML, CSS, JS, PHP and React Native. Samuel is bent on changing the legal profession by building Web and Mobile Apps that will make legal research a lot easier.