MULTINATIONAL CORP-EVOL & CUR ISSUE - Essay Example

However, it is important that one understands the significance of this merger to the two companies, their shareholders, competitors, the industry and the consumer (Rumyantseva and Enkel, 2002). In any given industry “The Rule of Three” manifests itself in the manner in which companies move within the market. The Technology Sector is undoubtedly one of the most oligopolistic, yet monopolistic markets in the modern day. This makes it conform to the rule of three, a fact that may have influenced and possibly affected the manner in which the market is shaped.

The rule of three suggests that every industry that is free of major entry barriers and regulatory constraints depicts two types of competitors; full time generalists and product/market specialists (Tu, 2014). Full line generalists are volume-driven and as their market share grows, so does their financial performance they own 10 to 40% of the market share. These full-line generalists usually depict very good financial performance as long as they maintain their control of the market (Sheth and Sisodia, 2002).

Product or market specialists on the other hand control 1 to 5 % and have curved out a niche in the market in which they control considerably. Their financial performance is inversely proportional to its market share, i.e. as their market share grows, their financial performance diminishes. Any firm that owns more than 5% but less than 10% of the market is in the ditch. Such companies depict the worst financial performance and are either taken over by a full-line generalist to increase their market share or by a product/market specialist seeking to grow into a full-line generalist (Sheth and Sisodia, 2002).

Every market usually has three full-line generalists. Even though at one time there would be more than three, the market usually shakes up to provide three full-line generalists. Consider the