A central belief of modern business theory is the necessity to focus on a core activity – sticking to the knitting, as it were. But in the 21st century, an era of globalisation and digital transparency, I am not sure this maxim strictly applies.
For very many industries, ferocious competition and perpetual pricing comparisons mean an organisation's main products are sold at little better than break-even. The internet encourages purchasing decisions based only on price. Qualitative issues are harder to discern on a computer screen – but price is plain (in theory). Hence gross and net margins have been relentlessly squeezed across everything from cars to cameras to home furnishings, as everyone tries to match the cheapest vendor.
In business-to-business transactions, procurement departments and online auctions have led to similar cut-throat pricing. Many suppliers now rely upon the “variation” principle that drives most profit for construction firms – a tendered contract will yield minimal margin, but any deviation by the client leads to supplemental work, priced at lucrative rates.