T SOME POINT
“globalization” turns from a game of cross-border competition for market shareamong individual companies into a contest about the key elements of the industry in whichthey compete. Instead of deploying assets broadly, companies start to focus on a few,often intangible elements, such as brands, relationships, and technology that allow them to achievemuch higher returns on equity and much higher market caps. Strategies based on inﬂuencing theevolution of industries begin to eclipse strategies based on actually owning all the assets.The exact timing of this transformation turns on the moment when a few companies in an industrydevelop the courage and insight needed to specialize and to gain advantages of scale by capitalizingon deregulation, declining costs of interaction, and increasing access to markets. As these companiesbuild world class capabilities in one piece of the value chain, they shed the rest. The value theycreate is so overwhelming that the rest of the industry reaggregates on the same model.For such industries as computers and soft drinks, this new form of globalization has already struck.For others, such as telecom and electric power, it is only beginning. The following industry articlesare intended to show how companies are weaving access, specialization, and scale into strategiesthat exploit the increasing integration of national economies with one another. In most industriesit will take at least a decade before a single global supply-and-demand curve develops. But that isnot the main point. In fact, as much money stands to be made in the mid game as in the end game,if not more. It is the pace and peculiarities of the transition that are most critical to strategists.
consumer product industries around theworld: the top four players in soƒt drinks, for example, share almost80 percent of the market, and Coca-Cola alone commands nearly 50percent (Exhibit 1). It might be reasonable to think that the beer industrywould tell a similar story. Reasonable, perhaps, but wrong.
THE McKINSEY QUARTERLY 1999 NUMBER 1
is a consultant in McKinsey’s New York office;
are consultants in the Toronto office. Copyright © 1999 McKinsey &Company. All rights reserved.
The brewers, if not the beer, won’t all be alike; they are beginning toconsolidate around segments of the business
Richard Benson-Armer, Joshua Leibowitz,and Deepak Ramachandran