December 3, 2005
Attenuate Goliath’s Scale and Scope Economies Strength
This post is part of the overall posting “How Can David Beat Goliath?- Strategy #7: Attenuate Goliath’s Strength“:
The large companies have economies of scope and economies of scale. This is true. But, fortunately for the emerging growth company, in most cases these are economic benefits but not strategic benefits for the large company (see the strategic benefits for the emerging growth companies in “Create a Time Advantage,” “Create a Scope Advantage“, and “Create a Scale Advantage,” for example).
The emerging growth company can compete with the larger company’s scale and scope economic advantage by following the thoughts in my last post on attenuating Goliath’s financial strength advantage, as scale and scope economies lead to a better economic model and, therefore, better financial strength. The emerging growth company competes with, and attenuates this large company strength by running a very efficient business and having plenty of capital to take it through tough market climates, which I discussed in that post.