It’s highly likely that whichever sector you are in (apart from politics!) a larger proportion of production will be controlled by fewer companies during 2017.
Recently, there has been a vast number of announcements in the media covering all sectors such as: Johnson and Johnson buying Actelion, Vodaphone merging with Ideal Cellular (India), Cisco buying AppDynamics, Ctrip buying Scotland’s Skyscanner and Heineken buying Kirin’s brands.
So, what’s driving it and what can you do?
Uncertainty and opportunity
The post-2008 credit crunch and historic low interest rates coupled with recent political and economic uncertainty means there have been businesses of all sizes and sectors looking to either sell and realise a return on investment, acquire to shore up a market position or purchase a supplier/competitor as part of a revenue and profit growth strategy.
Today you might feel like a spectator. Don’t succumb – turn uncertainty into opportunity. Here’s some ideas on how to do it.
Be patient not passive. Sometimes pre-empting change can be disastrous other times as a company you simply cannot influence the change. For example, you won’t be able to dictate the oil price, but when Shell sells its North Sea assets to Chrysaor, think how you can forge new links with them in their supply chain.
Be an acquirer. If your upstream supply chain is consolidating, there may be a requirement for suppliers like you to upscale. Rather than wait for the call, instigate the discussion with your customers, seize the initiative and demonstrate a real interest in their strategy.
Look for niches. The consumer cost of consolidation in internet search engines, social media platforms, mobile phone providers and energy suppliers etc. is choice. Reduced choice means unmet market need and these are the areas where you company may well be able to prosper. Areas where the consolidators can’t afford to operate or don’t have the specialist skills. Think about the growing number of small green energy suppliers to the National Grid.
Sell (or merge). You could sell your business, or a stake in it, to secure a return on your investment. You might have taken the company as far as it can go, or want it to go, so a sale to another company to take it to the next level is logical. You may also then have the capital to respond to another opportunity.
Prune. As an alternative you may want to divest one element off your business, something that is now not core to your plans, but is to the acquirer. Again, freeing up capital for other investments that play more a part of the future will provide the fuel you need.
Above all don’t be passive. Industry consolidation, unless you’re the consolidator, can be an anxious time. Strategy is about timing; not being reactive, but taking control to make decisions with confidence.
If you are interested in how others have done it, further information can be found here:
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