The Inspired Economist

Let’s face it, business growth is all about one thing: getting more money out of consumers’ pockets and into company coffers. Why do it, otherwise?

And often growth goes hand in hand with competition as companies scrabble to increase their share of a finite market.

Trouble is, anti-trust legislation introduces a certain ceiling beyond which a business may not grow within a sector.

So to keep on taking money from consumers, a business has to start expanding in a different sector. Most of the time this means buying an existing company, which also happens to eliminate future competition.

Businesses often justify this by saying greater consumer value can be achieved through merging backroom processes and increasing purchasing power. Good for the consumer you may think .. or is it?

The Real Consequences Of Business Growth

Three things happen when backroom efficiencies are introduced:

1. people lose their jobs, reducing the money in circulation, lowering living standards and reducing peoples’ ability to buy lasting quality;
2. products are made from cheaper products, forcing consumers to buy several low quality items instead of one good quality one;
3. innovation, competition and variety take second place as large companies concentrate on which common denominators they can sell for the greatest profit, eradicating consumer choice.

Are any of these consequences really in the public’s interests?

Destructive Competition Across Sectors

Take the growth of large supermarkets as an example. Not content with decimating the retail environment for food, electricals, health and clothing they’re now (in the UK) moving into restaurants, financial services and publishing.

Rather than bringing value to consumers, today’s practice simply eliminates competition, value and employment. Worse of all, it makes several industries reliant on a handful of companies, undermining the overall stability of an entire economy.

Government, bullied by big business, has allowed this to happen. Too many times during the financial crisis have we heard “this institution is too big to allow it to fail”. This means only one thing: businesses have grown too large.

A new framework is required which emphasises the need for a mutually supporting network throughout the economy alongside to support value driven competition within each sector.

Making Growth and Competition Good For All

As a first step, sectors need to be redefined or segmented, and businesses restricted to owning a certain percentage of spend in any one of these smaller packages. No company should be allowed to compete in more than, say, three of these new sector packages.

This will ensure an individual organisation cannot corner consumer spend in the way supermarkets or banks have. The same goes for service industries and B2B supply chain considerations.

The economic madness of biggest is best-est has to stop. The past of giant leviathans which can bring an entire country to their knees the moment they stumbles should be left behind. The future of small and agile , collaborative and competitive has arrived.

What do you think? Is this the way for the economy to move forward, or should we count upon greater centralisation and consolidation across sectors to provide stability for the years to come?

Leave a comment below. We’ve had some great opinions throughout this series and I look forward to reading some more!

Picture Credit: “Working Together Teamwork Puzzle Concept” by lumaxart from Flickr under Creative Commons Attribution Share Alike License.

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