Global Consolidation & Geography

Here’s two interesting and seemingly unrelated facts:

1. There is a global industrial consolidation in progress – bigger companies are acquiring smaller companies and are creating a state of global one-ness.

2. Geographically, countries and states are trying to become independent and are trying to break away from each other.

 

So what does this tell you??

Soon, we will have a very interesting state of the world. 10 big companies in 5000 countries. Do you think that is possible?

Sometimes I wonder where we are really headed. When I was 21, I used to find the news of a company buying another surprising. It used to be a big deal. When Microsoft bought Hotmail, it was huge news, and for a long time. But today, every day there is a takeover – companies get bought and sold as if we were in a retail market. Earlier, when entrepreneurs started a company, it was to get on their feet and have something of their own – don’t get me wrong – they still do it for all those reasons, but today, we have a new reason added to the list – to get bought over by a multi-million dollar company and making a quick few millions.

Another trend that is seemingly becoming more interesting, is that of distributed global consolidation. Companies buy local companies that fit their business model the most and then declare them as subsidiary company. When Deloitte did this ages ago, it was a first of its kind practice, however, it is now a norm. eBAY bought Bazzee in India and made it eBAY.in; Consulting firms do it everyday; even big IT firms have started to follow this trend.

Now try and think of this development with the 2nd piece of the news above - Geographic independence. Think about what will happen if we had 5000 countries, because countries broke and new ones formed – and 5-10 companies with everything else as a subsidiary. It is an interesting thought, and do realize that I am not planning what to write – I am thinking about it as I write about it. Do you think this can ever happen?

I doubt it, despite the trend suggesting otherwise. I recently heard about the concept of Entrepreneurial Talent as a national economic resource, and that made me wonder – can you really run out of this resource? Is it a limited resource? And connecting that back to this discussion, can you ever have just 5-10 companies in the world?

I leave that up to you to comment about…