Re: Re: Re: query

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

The HBR article seems to be in line with what I was suggesting.  Also, there
is difficulty in defining the relevant market.  Do you measure a market for
electronics, or just computers, or just notebook computers, or just a notebook
with a particular chip?  I think that this subject is worthy of more
discussion.

Doug Henwood wrote:

> Michael Perelman wrote:
>
> >Interesting question.  Wouldn't that be very difficult to track over time
> >now with all the spin offs and strategic combinations?
> >
> >Rudy Fichtenbaum wrote:
> >
> >>  Can anyone point me in the direction of some data on the growing
> >>  concentration of capital in the U.S.?  I would also like some data on
> >  > the number of mergers.
>
> What do you mean by "concentration of capital"? Of ownership? Share
> of product markets? On the latter, see an article in the current
> Harvard Business Review
> <http://www.hbsp.harvard.edu/products/hbr/julaug00/R00405.html>,
> which reports no increasing concentration of market share:
>
> >The Dubious Logic of Global Megamergers
> >
> >by Pankaj Ghemawat and Fariborz Ghadar
> >
> >The almost universal belief among executives today is that bigger is
> >better: companies are entering into huge, pricey cross-border
> >mergers at an unprecedented rate. Common wisdom is that industries
> >will become more concentrated as they become more global. This idea
> >has persistently dominated business -- from Karl Marx's "one
> >capitalist kills many" theory to the more recent "one, two, or three
> >shall dominate" logic put forth by business practitioners.
> >
> >In this article, the authors debunk the myth of increased
> >concentration; the perceived links between the globalization of an
> >industry and the concentration of that industry are weak. Empirical
> >research shows that global -- or globalizing -- industries have
> >actually been marked by steady decreases in concentration since
> >World War II. The authors present the biases that managers often
> >have about consolidation and offer alternative strategies to
> >pursuing the big M&A deal. There are better, more profitable ways of
> >dealing with globalization than relentless expansion, they say.
> >
> >Those strategies include buying up cast-off assets from merging
> >rivals; focusing more on domestic or regional growth rather than on
> >global expansion; taking advantage of merging rivals' weakened
> >market position during integration and launching an aggressive
> >marketing campaign; and building alliances with other companies
> >rather than buying them up.
> >
> >In an era that is witnessing technological discontinuities, managers
> >shouldn't focus on size as a goal; instead, they should focus on the
> >development of new business models that help them compete.
>
> --
>
> Doug Henwood
> Left Business Observer
> Village Station - PO Box 953
> New York NY 10014-0704 USA
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--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael@xxxxxxxxxxxxxxxxx