The big, the small and the UGLY

The leader must take up a strong position, inspire others to follow him, discover where the enemy is weak and attack there. – The precepts of Ssu Ma Jang Chu – 400BC

In general, the marketplace looks like this;

The Super Powers (Big)
They own the territory, set the rules, and, like the 400kg gorilla, sleep anywhere they want. The big dogs get the biggest pieces of meat. The superpowers are in the production business – they are as concerned with protecting their position on the high ground as they are with gaining new ground.

The Secondary Powers (Ugly)
Their job is to get bigger so that they do not get smaller. They often achieve this by knocking off a lot of small companies rather than attacking the major powers. It’s easier to eliminate the weak than to attach the strong.

These secondary powers are in a vulnerable middle ground. They are facing attacks from both the big buys and the guerrillas. As an industry moves to maturity, the marketing action polarises to the big at one extreme and the small specialists at the other. The never-never land where you never want to be is a medium-sized company in a mature industry.

The Business Guerrillas (Small)
In third place is everyone with a small market share, specialists in a big market. These firms biggest threat is the 800kg gorilla.

What interests me from this quote of “Sun Tzu – Strategies for Marketing” is the never never land. In New Zealand I think it is fair to say that some markets have either fully matured or are very close. This leaves very little room for The Secondary Powers.

Take the shakedown in retail, there are very few medium sized businesses. They are either stores that are a part of one big group, or small boutiques that specialise. Recruitment world wide is a mature market, huge multi-nationals or smaller specialists.  In NZ at present there are a few Secondary Powers, but I am not sure that is a great place to be.

Within transport and logistics, I believe that the Courier Market has neared maturity, Freightways, Express Couriers and the rest. 3PL/warehousing continues to mature and make entry very difficult without being specialists.

Interestingly enough, the Transport industry is only over the last few years starting to show signs of maturing. There are more acquisitions, mergers and off-shore investment. There still remains a significant number of Secondary Powers. The challenge for them in the next few years either become big, or settle for being specialist, staying in the middle ground is never where you want to be!

Comments

[Grafas]

So how does a company that sits in the small (guerillas) section move from there to the ultimate goal of being 'big' without passing through the medium size? If it does, how long is too long? And doesn't trying to move through it too quickly present a heap of risk? Would the best way to do it be to have an aquisition strategy that involved buying reasonably significant companies by financing up to the hilt?

[Andrew Nicol]

Have posted a response here.