Consolidation Can Deliver More Than Greater Economies of Scale

Consolidation has been the rule across many different industries for decades. The benefits of consolidation often seem most obvious where economies of scale are always awaiting those operations that grow the largest. While practical considerations of those kinds are certainly never to be overlooked, consolidation can also produce other types of benefits. As a look at will show, for instance, consolidation can produce greater strength, resilience, and capability even in industries where scale alone does not necessarily lead to improved efficiency.

In the spheres of marketing, communications, and event planning and management, after all, some of the most successful players have often been of relatively small sizes. In fact, some have even identified a lack of potentially overweening scale as an advantage for many such companies. Being able to move quickly, identify and account for the kinds of developments that larger organizations would overlook, and move forward with a particular, well-defined character can all be advantageous.

At the same time, some of the greatest success stories of recent years have involved quite a bit of consolidation. When the executive referred to above took over a large and growing group of disparate marketing, communications, and event management companies some years back, for instance, he knew from the start that they had to be combined. With seventeen different, generally independent organizations to fit into the whole he envisioned, plenty of work obviously had to be done.

Some would have backed off from that point directly, assuming that too much would be lost in the transition. Instead, the new President of the group made sure that an appropriate plan was developed, so that nothing of overly great value would be sacrificed to create a cohesive whole.

That turned out to be all that it took to elevate the entire organization to a new level of success. Although the individual characters and achievements of the subsumed parts had to be sacrificed, to some extent or another, the new entity that emerged did so with real strengths of its own. While economies of scale might not be common in fields such as these, this is not to say that the right kind of consolidation cannot produce advantages of other kinds.