Name three dominant airlines.

Now, name three dominant food-chains.

And finally, three dominant supermarket chains.

I’m sure you found that exercise easy. And it’s not surprising, because there is a theory that explains how, in every industry, three major players emerge to dominate the market, and the balance is made up by specialist niche players or companies that stand out in different ways.

It’s called The Rule of Three, developed by Professors Jagdish Sheth and Rajendra Sisodia. What their research showed was that three market leaders emerge, surrounded by other smaller niche brands or companies that create a different marketing direction for others to follow, away from the mainstream.

It helps companies to identify whether they want to become part of the ‘big three’, and is useful for strategic and competitive moves carried out by businesses. Companies can determine where they stand in respects to competitors.

There are some limitations to the rule, and in Europe it may be better to consider it appropriately as the Rule of Four, as there are several industries where the competition laws allow more bigger players to take part than in the USA, but it’s an interesting analysis for industries and competitors to think through if they are considering changes and expensions in the way they work.

This is expecially true in developing markets. And, of course, the web has created a different marketing culture. Think about books (Amazon), online auctions (Ebay), search engines (Google). These are prime examples of how single categories can be dominated by one company, allowing others to occupy niche positions.

And other industries are dominated by just two companies (Pepsi and Coke, Duracel and Energiser, Visa and Mastercard are just some examples), so there may be room for other companies there, too.

Who knows what the future will bring in terms of the competition to these dominating businesses in their specific industries? It may be that the Rule of Three (or Four) only applies in a long-term frame. But it’s an interesting concept to consider as the markets change through greater competition from the Far-East, Brazil and Russia, and as the US dominance is threatened in other areas of the world.

Thanks again

Sean McPheat
Managing Director
MTD Management Course

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It’s no secret that many of today’s major corporations have office, manufacturing plants, and supplies in countries all around the world. The car you drive may have been made in one country and sold to you in another and the same applies to many of the standard household items you use every day.

In order to be an effective manager its important for you to understand the dynamic of the international workplace. A company may call itself “international” but that could mean one of many things. Let’s take a look at the differences between them.

First we have domestic businesses. Domestic businesses are generally located in one country only and obtain all of their resources from that same country. Examples of domestic businesses are banks, mortgage companies, and small retail chains.

International companies are becoming larger in number and represent organisations that have their main offices in one country but at the same time finds its resources or makes a large percentage of its sales in another country (or in several others).This company will earn most of its revenue from its main country or origin but will earn a significant percentage (even if only 10%) from selling in other countries.

Multinational companies, also known as MNCs or multinational corporations, have a much wider global reach. The company’s home offices may be based in one country but the organisation will have several other administrative and manufacturing offices located in several countries around the world. Many of today’s modern car companies have locations in several countries, making it easier for them to make and sell their cars to a global market while making sure they’re tailored to the needs of each demographic location.

Last, but certainly not least, are global businesses. Global businesses tend to operate in several countries but never really claim one as being “home.” Some companies, like energy companies, may find it possible to operate without claiming one country or another as home but in reality it is very difficult to operate in this manner.

So what type of company do you work for? I’d venture to guess you work for one of the first three- most likely one of the first two. Do you think there are advantages or disadvantages to companies attempting to spread their wings internationally?

Thanks again,
Sean

Sean McPheat
Managing Director
MTD Manager Training

Click below for a:
FREE email course “Improve Your Management Skills”