And being bought-out by large competitor is not really a bad thing.
That depends on how you look at it. It is good for your company, but it is not good for the market and the customers.
Why? I think it actually is pretty good for the market in most cases.
Competition means progress. Lack of competition means lack of progress.
Buyout quite often means more competition, not less. Usually the subject of buyout gets enough capital and know-how to become real competitor. It is competition on steroids.
Buyout quite often means more competition, not less. Usually the subject of buyout gets enough capital and know-how to become real competitor. It is competition on steroids.
Uhm, usually the bought out company is closed down. Why keep a competitor for your own products? They buy it and shut it down. That means less competition on the market. At least in my book.
Buyout quite often means more competition, not less. Usually the subject of buyout gets enough capital and know-how to become real competitor. It is competition on steroids.
Uhm, usually the bought out company is closed down. Why keep a competitor for your own products? They buy it and shut it down. That means less competition on the market. At least in my book.
True. Look at all the companies Government Motors and Crisis Motors bought back when they were making money.
It is the natural order as a product becomes comodified.
Now what happens when these naturally produced monopolies raise prices enough to allow new entrants? You get new entrants. Toyota, Honda, etc.
Engineering is the art of making what you want from what you can get at a profit.
Not necessarily. I am currently in the position of a small company entering a much overprized market full of big and superbig corporations. It is a very, very hard uphill battle and I honestly dont think we will make it. We might get bought out at some point and we have some deals going that keep us affloat, but we are to small a competitor right now to even appear on the radar of the big ones. They have secured their position with quite unfair business tactics and bribery on top of that. They can even force their customers to stick with them. That is how they act. A small company like mine has a really, really hard time there. I dont want to say it is impossible, but almost impossible.
Almost impossible is in fact the norm for all new business. i.e. the failure rate is something like 90% after 5 years.
But what new entrants do is put a cap on the "excess" profits. i.e. the big guys can charge 10% above the optimum price. At 100% above optimum a LOT of competition is attracted.
Engineering is the art of making what you want from what you can get at a profit.
Buyout quite often means more competition, not less. Usually the subject of buyout gets enough capital and know-how to become real competitor. It is competition on steroids.
Uhm, usually the bought out company is closed down. Why keep a competitor for your own products? They buy it and shut it down. That means less competition on the market. At least in my book.
Nonsense. Sometimes this happens, but this is quite atypical scenario. It only applies when bought out company does nothing innovative, only occupies part of market. But in that case, it is no big loss for consumers anyway.
There was a small casket company in Syracuse NY, the Marcellus Casket Company that manufactured hand made Caskets that were premium; the pinnacle of the Industry. Ronald Reagan was laid to rest in one.
The Marcellus Casket company was purchased by the leading Casket Manufacturing chain, then it was closed, and it's manufacturing equipment sold off worldwide.
I suppose its progressive: The quality of Casket is closer to the same for everybody. It terms of quality, just lop off the top.
In my little corner of the world consolidation is part and parcel to commoditization. Think electricity or phones or cloud... Simon Wardley does a decent job of explaining it here: http://skillsmatter.com/podcast/cloud-g ... ust-change
I'ts hard to tell why the owners of Marcellus Casket Company sold; but you can bet the Financials had to be central to the reason. The best I can tell their financial weakness stemmed from their own stagnation. The company was a union shop, as was common in the Central New York area at the time. There were few updates in equipment that may shift employment, and reduce costs as best as I can recall or gather. The nail in the Coffin (excuse the pun) was according to the following link:
The real legacy of Marsellus - handcrafted, pricey, wooden caskets has declined as the demand for that product has declined.
It seems unions have a way of stagnating companies, and disincentive changes and updates required to enhance profitability in favor of employment. Sorry it didn't work out for the 300+ employees skilled in making caskets.
As an aside, I had a humanities professor, Dr. Bradford Broughton, whom had a Marcellus Casket lid made into a coffee table by the Catholic religious order who founded the company. The lid was inverted and had a glass top. Every day was a reminder for him about how he would soon be spending eternity.
Skipjack wrote:Yeah, yeah... Lack of competition is actually good for the market. I see.
LOL
Lack of FRAGMENTATION is good for the market. You, as consumer, will have better and lower priced e.g. photovoltaic panels, if there is 5 strong competitors, that if there is 5000 competitors. Simply because those 5 can better concentrate capital to invest in innovation.
I know, this is sad story if you are the startup struggling to compete... But you know, get big (hard), get niche (if you are smart) or get out (the most likely outcome)...
BTW, even if you want to blame free market for killing most of small enterprises, please note that there the free market is the only system that actually allows small companies to start as incentive of individual players.