The consolidation among car dealers that is ongoing across the globe is interesting to monitor. In the Netherlands, for example, the top 10 of largest automative companies accounts for roughly 1/3 of all car sales while the top 50 takes 2/3 of that. Solid strategic arguments underpins this consolidation and makes it even inevitable: preferences of car brands (stronger and more professional distribution) and customers (‘one-stop-shopping’) as well as purchasing and efficiency advantage bring strong arguments to the table. Only a post-it is nowadays sufficient to list the key characteristics of the winners, only leaving lean and mean optimisation to do the rest. Success guaranteed or not?
When sectors consolidate, competitors become more and more similar and, partly through avid benchmarking, dominant success formulas emerge (in academic language: institutionalisation creates so-called 'industry recipes'). Where uniformaty reigns (no matter how hard players will deny it), the space for new players to do things completely different grows. Usually they come from unexpected corners (Google vs. Yellow Pages), are underestimated (iPhone, AirBnB), go well below current prices and offerings (Action, Ryannair) or reverse assumptions ('It's amazing, but kids today don't want hard copy anymore' , said the last CEO of Polaroid).
Nobody wants to drive a car without a crash test, will the main automative companies have crash tested their own strategies? Will they survive the unexpected?
#crashteststrategies #consolidation #industryrecipes