think: act magazine No. 17 - Size Matters - Roland Berger

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Rubrik hierONE MAN – millions in profitsTiny companies are everywhere you look. They marketthemselves globally, have almost no capital and, thanks to theInternet, can market their products and services worldwide.26 THINK Act september 2011
Rubrik hierUNTANglINgthose transaction costsTo every action, there is an equal and opposite reaction.The online world is populated not only by tiny businesses, but alsoby juggernauts like Google, Facebook and eBay. The economiesof scale apply just as much to clicks-and-mortar business models.Sports like kite surfing, which is enjoying a rapidworldwide increase in popularity, are supplied almostexclusively by small companies. Much of theinnovation is being driven by fans rather than bigdesign departments. Elsewhere, sales at the world’sbiggest online platform for handicrafts, etsy.com,are approaching USD 500 m. Smaller manufacturersare enjoying a renaissance throughout the Westernworld. Anyone can buy Gucci, but true connoisseurscan make a statement by buying an ethical fashionlabel from Amsterdam.You might expect the world’s biggest seller ofDarjeeling tea to be Unilever or some other foodgiant, yet it’s the Berlin company Teekampagne,founded by a professor of entrepreneurship and runby a handful of people. Perhaps the most impressivevictory over the industry giants has been by amultitude of small and medium-sized companieswith no names; over 50% of the world motorcyclemarket is now controlled by a network of suppliersand assemblers in China. Even the biggest are notexactly household names – Qingqi, Jialing, Zhejiang,Jincheng, Xindazhou – but these companies makevery good bikes at affordable prices and sell themunder eminently forgettable brand names. In thedeveloping countries, they easily outsell the Japanesegiants Yamaha, Honda and Kawasaki.Untangling those transaction costsIn a standardized, networked world of flat hierarchies,small companies can often fight way above theirweight class. It’s also an appealing idea, since DavidsTHINK Act september 2011 27
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think: act magazine No. 17 - Size Matters - Roland Berger

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