A few years ago, the idea of having big data and its possibilities to improve sales would make the worldwide market go to a craze. However, the tech companies back then didn’t know how to utilize the collected information. But, with the increasing thirst for information, tech giants today can analyze the raw data and turn this into useful statistics that help forecast future trends.
Today, it is a norm to see smaller companies being gobbled by well established giants who desire to create even more massive conglomerates. For example, a few years ago Rakuten acquired both Buy.com and Ebates, effectively spreading the company’s influence across the continental United States. While it may seem that there are hundreds of brands in the market, they actually have a lot in common (same owners, shareholders, etc.)
So, why do companies merge?
Eliminate Competition
In an attempt to eliminate competition, well established tech companies buy any startups that may be a threat to its operation in the future. Through this, the new company acquires a more significant market share and clientele dominance.
Increase the supply chain power
By merging with other companies, tech giants increase their geographical coverage and supply stores, therefore eliminating a level of costs such as transportation and consulting, among others. The merger also diversifies its products. This reduces the stretch of a company’s focus, helping it to concentrate on one operation, increasing its performance and profitability.
Tech mergers help gain a competitive advantage in the distribution and marketing networks. Rather than expanding to a new zone and start from the ground up, the alliance practically helps new companies gain thousands of customers overnight.
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