Atma Nirbhar & Rule of Three

1.???I think that Atma Nirbhar initiative should not create mushroom of small players. These small companies will disappear and struggle if they have less than 10% of market share. Today if we are not in top 3 companies in that market category, we will not survive. Research has proved that markets evolve in a highly predictable fashion, governed by the Rule of Three.

2.???Just as living organisms have a reasonably standard pattern of growth and development, so do competitive markets.

3.???Each market tends to be dominated by three major, volume-driven firms, which are termed full-line generalists controlling 70-90 % market share, surrounded by a of smaller margin-driven firms called market specialists representing market of 5- 10%.

4.???If market share of generalist goes down below 10%, they will go to ditch. If specialist companies try to increase market share more than 5%, they will also lose their USP as well as margins.

5.???There are lot of mergers and demergers are taking place to be in top Three. We can give many examples in chemical, petrochemical, automobile, IT, tires, pharmaceuticals, and many.

6.???Even number 3 will be always in trouble as it is very close to the ditch. The number one company is usually the?least?innovative, though it may have the largest R&D budget. The number three company is usually the?most?innovative. However, its innovations are usually copied by the number one company unless it can protect them. Such protection becomes more difficult to attain over time.

7.???The lure of greater market share to niche players is a powerful one and has caused many successful specialist companies to sacrifice their distinguishing characteristics and dilute their competencies in a headlong pursuit of growth, only to end up in the ditch.

8.???The greatest impact and potential dislocations arising from the Rule of Three occur when an industry makes a major geographic transition from a regional to national player, or even more dramatically, from national to global player.

9.???Ultimately, the Rule of Three is about the search for the highest level of operating efficiency in a competitive market. Industries with four or more major players, as well as those with two or fewer, tend to be less efficient than those with three major players. The role of the government is to ensure that free market conditions do indeed prevail, to allow industry rationalization and consolidation to occur naturally, and to step in when an industry seeks to consolidate too far, i.e., to a level where fewer than three players control the lion share.

10.?As more markets become globalized or get transformed through technology in coming years, CEOs everywhere will have to reassess their corporate positioning and strategic goals. For some, this will spell a once-in-a-lifetime opportunity to seize the initiative and firmly establish their companies on a larger stage. For many others, it will require hard thinking about strategic choices, and the courage to make painful but necessary decisions about markets not served and products not offered.

?????????????????????????????????????????????????????????????????????????????????????????????????????????????????R.D. Khimesra