Understanding Markets and Strategy by Morley Malcolm.;

Author:Morley, Malcolm.;
Language: eng
Format: epub
Publisher: Kogan Page (unlimited)

People in a truly innovative company will answer the questions above very easily and differently from those in a company that talks in slogans about innovation but doesn’t have an organizational culture that supports it.

Innovation, particularly where it involves invention and entrepreneurship, requires an organizational culture to sustain it. Large companies sometimes find it difficult to provide the culture necessary to support innovation and entrepreneurship. This results in innovators and entrepreneurs not feeling as if they ‘fit’ with those companies and innovation and entrepreneurship being inhibited.

How often has it been seen that larger companies acquiring smaller companies because of their innovation and entrepreneurship soon lose the leaders of the innovation in those acquired companies because of a clash of organizational cultures? How often have the acquiring companies not been able to realize a sustained competitive advantage that they had hoped from the acquisition?

Innovation can have a significant impact on competition within markets. New entrants to markets are often associated with innovation that enables those new entrants to change the current dominant paradigm of competition. How many competitors in the market identified that the innovative technology associated with Dyson vacuum cleaners would make such a huge impact on the market and the competitors within it?

Practitioner question

What innovations are likely to reach the market or segment that are likely to have a significant impact on competition within the market or segment?

Mergers or acquisitions

Mergers and acquisitions can have a significant impact on competition hence there is law to prevent them where it is believed that this impact would be deleterious for buyers and the ability to compete within the market.

Competitors pursue mergers and acquisitions for a wide range of reasons. These include:

1 to achieve market entry;

2 to achieve increased market share;

3 to achieve greater economies of scale and cost reduction;

4 to gain access to physical assets, products and services, innovation and intellectual property, eg brand;

5 to gain access to distribution channels;

6 to save time as acquisition is faster than organic growth;

7 to achieve synergy from the combination of assets;

8 to achieve a diversification of risk;

9 to achieve better returns from the capital employed;

10 to increase competitive power in the market;

11 to achieve a critical mass and/or geographical coverage to enable them to compete for buyers with large and geographically dispersed requirements.

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