John Linton ........business euphemisms for reduced cmpetition.
I noticed that iinet had bought out Transact for whatever reasons that made sense to the two parties - presumably $60 million dollars was a sensible return for Transact and an appropriate expenditure for iinet. Whether any customer involved benefits is a irrelevancy in such transactions but there is no reason to believe that there is any customer 'down side' as presumably the customers will see no difference in any aspect of their services for some considerable time and its not as though there isn't enough competition in the ACT residential, business and government markets. I was more interested in the latest whining by a giant multinational in a completely different field:
http://www.smh.com.au/business/heinz-hits-out-at-home-brands-20111121-1nr1l.html
Personally I don't put tomato, or any other sort of sauce, on my food and haven't eaten many cans of baked beans since I was at boarding school in another country in another century - so whether Heinz products are available in the local super market or not is a matter of complete indifference to me. However other recent articles about bread and milk changes referenced in the article do concern me a little more - on a selfish basis (I like fresh bread) and I think the destruction of dairy farms by voracious companies like Coles and Woolworths are deplorable....but then I have a deep appreciation of farming that doesn't involve the slaughter of animals generally and a particular affinity for dairy farms.
Similarly whether American multinationals (or any other multinational) have trouble competing with an Australian mega-business would usually not attract my sympathy/support - which it doesn't in these cases other than to realise that all dominant businesses are bad for the end user of their products in anything other than the very short term when they are destroying their competitors - simple business principles, and endless business school courses, have made that abundantly clear for several millennia. So why am I raising this issue in my overly cluttered mind that has far more directly relevant issues to consider?
Because it is a stark reminder that in any business that is 'stagnant' the only result will be the destruction (a la Transact) of all companies that are faced with the tyranny of 'market forces' that demand ever lower prices, and therefore ever lower profit margins, that inevitably lead to ever more companies getting out of businesses - even multnationals that have dominated their marketplaces for almost 100 years....in the case of the Heinz example.....and, you would have thought, had an economy of scale that was 'competition proof'. It just goes to show how badly even the largest and long dominant companies can mis-guess their strategies.....Heinz shouldn't have continued to concentrate on canning food they should have added the distribution to the end user to their capabilities....not placed themselves in the position of allowing supermarket chains to take over all food outlets and then turn around and eliminate their suppliers. "Beans Means Heinz" was fine to destroy Cross and Blackwell (or whoever) but unfortunately it wasn't going to work against "No Heinz On The Shelves" means No Heinz.
All Woolworths will do is to sell 'white label' beans at a loss until Heinz closes its factories and then they will increase the price - no big deal - Heinz have employed that basic practice for as long as they have been a dominant provider of various products. Telstra have employed the same tactic for the past three years in the ADSL and other markets in Australia. It all revolves around getting to a 'monopoly' scenario (or failing that a duopoly will work almost as well). It is not worth commenting on in the media let alone in a random rambling such as the words I am currently writing - except for the fact that such incidents will, almost inevitably, add up to a more comprehensive change, for the worse, for baked bean eaters and tomato sauce slurpers. Perhaps that's a good thing if those current users stop buying those pernicious products altogether?
Perhaps Australian communications buyers would be better off returning to a Telstra only set of service choices at whatever price Telstra wants to sell them for?
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