Monday, July 31, 2006
Monopoly is at the heart of every successful business
Milind M. Lele
It’s not about competition, it’s about monopoly
Monopoly, according to Lele, need not be large as painted by ‘economics 101’. A prominent example that he cites is of Honda: the company could capture one-third of the profits, even while controlling less than 10 per cent of the US minivan market, because the Odyssey had seats that folded flat.
“Monopoly is at the heart of every successful business,” declares Lele. “Pursuing it is not only moral but essential for anyone interested in creating a company with lasting value.” This is not about SCA or ‘sustainable competitive advantage’, clarifies the author, because SCA “does very little to shed light on some of the most startling success stories of the last dozen years,” including Starbucks.