These include learning how to carefully protect their core culture as they absorb new companies and focusing on retaining the best employees of acquired companies. Building a scalable IT platform is also crucial to the rapid integration of acquired firms. Companies jockeying to reach stage 3 must be among the first players in the industry to capture their major competitors in the most important markets and should expand their global reach.
Stage 3: Focus. After the ferocious consolidation of stage 2, stage 3 companies focus on expanding their core business and continuing to aggressively outgrow the competition. By this time, there are still generally five to 12 major players. This is a period of megadeals and large-scale consolidation plays; the goal is to emerge as one of a small number of global industry power-houses. Typical focus-stage industries include steel producers, automotive OEMs, shipbuilders, and distillers.
Companies in stage 3 industries need to emphasize their core capabilities, focus on profitability, and either shore up or part with weak businesses. The well-entrenched competition at this phase will attack underperformers. Recognizing start-up competitors early on allows focus-stage competitors to decide whether to crush them, acquire them, or simply emulate them.
Stage 3 companies should also identify other major players that will likely survive into the next, and final, stage and avoid all-out assaults. Stage 4: Balance and Alliance. IBISWorld estimates that industry revenue has fallen Over the five years to , the Postal Service industry, analogous with the United States Postal Service USPS , experienced increasingly difficult operating conditions and ultimate revenue declines. Committed retiree payouts have resulted in the USPS posting near-consistent negative profit since , unable to reduce its largest operating expense.
Moreover, the growth of online services, such as mobile banking and e-mail, has strained demand for traditional postal services during the five-year period, and the industry's sole business continues to operate on a loss.
However, late-period opportunities arose for the industry, keeping revenue from declining more drastically. Thus, over the five years The Data Recovery Services industry in the United States salvages computer files from damaged, failed, corrupted or inaccessible storage media.
Although the increasing number of households with at least one computer and the rising popularity of electronic devices were expected to provide ample demand for industry services, options for data recovery and data loss prevention have expanded in recent years, and demand for industry services has declined.
Over the five years to , industry revenue is estimated to fall an annualized 9. Although dominated by nonprofit organizations, this industry is also composed of for-profit companies that provide direct assistance to communities affected by disasters. Industry revenue, which is generated mostly from government funding and private donations, exhibited a high level of volatility during the period due to the unpredictable occurrence of natural disasters.
In addition, industry operators are affected by economic conditions that influence the amount of funding industry operators receive from private entities. In , industry revenue Operators in the Oil Pipeline Transportation industry primarily transport crude oil through pipelines.
The industry grew in line with booming US oil production over the five years to , although volatile external conditions were challenging. Advanced drilling techniques have increased the number of profitable oil reserves across North America over the past five years.
As production boomed, oil and gas companies demanded additional pipeline capacity to transport crude oil from extraction sites to refineries, where crude oil is refined into Download a free sample report today to discover the breadth and depth of information available at your fingertips!
Toggle navigation. There are many examples of Consolidated Industry in corporate history. Perhaps the best example is the merger of General Motors and Chrysler in , which resulted in both companies financially struggling. This merger increased the market shares for both companies. The pharmaceutical industry is one of the most consolidated industries out there. One factor in this is the popularity of generic drugs. Another factor is the expected expiration of patents on blockbuster drugs.
The consolidated industry is a process where business sectors are merged into one company, usually because they are small or losing profits. Consolidated industry can benefit consumers because it can result in lower prices or more products on offer e.
Larger companies have been able to expand their production capacity to increase efficiency and lower costs. This has led to lower prices and higher profit margins. The economies of scale have also allowed large companies to achieve better production values through their ability to purchase large quantities of raw materials, which lowers the cost of production.
Another way that consolidation has made it difficult for small businesses to compete is through outsourcing. Outsourcing has become a very popular method for companies to cut costs and allow an ideal business model. This deprives smaller companies of obtaining the capital they need to compete.
Outsourcing also provides larger companies with the ability to produce goods at a lower cost, making it difficult for small businesses to compete in domestic and international markets. Small businesses have also been challenged by the shift in business models that involves more buying and selling of products than manufacturing these products.
This has forced many small businesses to exit the marketplace because they have been unable to evolve into a business model to buy and sell goods rather than make them.
As more companies have merged together, the market has become less competitive and less diverse. As consolidation has increased in certain industries, the number of smaller companies has decreased. This means that consumers are purchasing fewer products and purchasing from fewer companies that provide a similar product or service. The result of this is that only two large companies can dominate the market. This leaves consumers with fewer choices which can lead to higher prices and less innovation.
Federal Trade Commission points out on its website, many mergers benefit competition and consumers by allowing firms to operate more efficiently. However, some mergers can lead to monopolistic positions, which can then lead to higher prices, decreased innovation or a drop in the quality or availability of goods or services.
Consolidations and mergers can be horizontal or vertical. Horizontal integration occurs when two companies within the same industry become one, on roughly equal terms. This type of integration often raises antitrust concerns, as the combined firm will have a larger market share than either firm had before merging. Vertical integration occurs when two companies are at a different stage in the production process; for example, a car maker merging with a car retailer or a parts supplier.
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