Beating the Global Consolidation Endgame: Nine Strategies for Winning in Niches

By Dr. Fritz Kroeger, Dr. Andrej Vizjak, and Michael Moriarty

As industries worldwide move toward consolidation, niche companies need to take advantage of strategies that are forward-thinking and anticipate new trends. BEATING THE GLOBAL CONSOLIDATION ENDGAME identifies nine key strategies that niche companies must master in order to outperform their markets and gain the largest benefits from consolidation.

Action steps
To time the strategies accurately, all decision-makers must know what stage of industry consolidation they’re in, along with the implications of each stage. This ensures a company’s survival and success against global consolidators. Taking you through the Merger Endgame Theory life-cycle, the authors show how companies can develop stable strategies and viable niches:

• Determining your industry’s Endgame position and expected evolution of consolidation in coming years
• Identifying industry sectors with comparable models to illuminate strategic success factors for your sector
• Knowing the strengths and weaknesses of Endgame consolidation winners and losers
• Spotting potential market splits and new configurations for the value-creation chain
• Determining the best niche options and the best sequence for executing them

These action steps are supported by case studies of leading companies around the world including BMW, NetJets, Swatch, Ducati, and KPMG – and show how these niche fighters developed competitive advantage, survived market collapses, and delivered superior customer service while increasing their market share.

Research basis
For over 15 years, A.T. Kearney has undertaken a comprehensive analysis of the entire world’s industrial base—public and private, local and global—over 98% of the world’s business activity is reviewed continuously. One of the striking findings from this ongoing research is that all industry sectors (every single one of the 250 tracked) is consolidating globally over roughly a 25-year horizon.

Some move slower, and others faster. A.T. Kearney’s theory predicts a merger endgame in which the top three or four global players will capture 60-70% of global market revenues. It’s a natural product of our last 40 years of increasingly free movement of finances, people, and information.

Building on that analytical base, this study identified 600 companies that had achieved the highest revenue growth and highest market capitalization growth over a sustained period of time. All available information – quantitative and qualitative – about those companies was analyzed to determine which strategies the companies used to remain viable and profitable over time. These strategies were compared with where companies’ industry sectors were in the Merger Endgame life-cycle. Throughout the two-year study, the findings were tested for relevance and stability both within the A.T. Kearney network and with interested client companies.

BEATING THE GLOBAL CONSOLIDATION ENDGAME answers what happens to the remaining niche players that fend off the global consolidators to capture the other 30-40% of global market revenues. They generally grow faster and make more money. But why aren’t they slurped up by the global consolidators that seek domination from scale and cheapness? The authors’ nine strategies can help companies find and defend their own successful niche.

Authors
Dr. Fritz Kroeger is partner and head of A.T. Kearney’s European strategy practice. He is the author of eight books on restructuring, growth strategy and merger integration, including Winning the Merger Endgame: A Playbook for Profiting from Industry Consolidation(McGraw-Hill, 2002) and Stretch! How Great Companies Grow in Good Times and Bad (John Wiley & Sons, 2004).In 2004, Fritz was chosen by Consulting Magazine for its annual list of the Top 25 Most Influential Consultants.

Dr. Andrej Vizjak is partner and managing director of A.T. Kearney’s Eastern European operations. His consulting work over the past 10 years has focused on M&A growth, consolidation, innovation and helping smaller companies become successful international niche players.

Mike Moriarty is partner and head of A.T. Kearney’s North American consumer industries and retail practice. He has written extensively on global competitiveness, consumer trends and new markets, including Power Play: The Beginning of the Endgame in Net Markets (John Wiley & Sons, 2001). He has more than 30 years of industry and consulting experience in the retail and fast-moving consumer goods industries.

Purchase on amazon.com