Many large companies are following the ‘top three’ rule of business.
There have been lots of mergers in the last year in telecommunications, auto, banking, and healthcare industries. What are the signals for a merger or a rapid change? Well there is the ‘top three’ rule. In competitive, mature markets, the rule says there is room for only three major players along with several niche players. Some industries even have a similar ‘top two’ rule. This can be seen in beer, rental cars, cereals, tires, insurance, pizza chains and many more industries.
If a company, division, or plant is not in the top 2 or 3 in its business, then senior management will look closely to see if it can be or management will explore business alternatives. Jack Welch, GE’s CEO, is well know for instilling the ‘fix-it, sell-it, or close-it’ mentality in its management.
Life Lesson Earned: The ‘top three’ is a business model that more businesses are adopting. Every business has a business model. Know it. Understand how your company or customer positions itself in the marketplace. What products or services does it offer? What are its margins? Finally, what does this mean to you?