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With consolidation comes opportunity

With consolidation comes opportunity

The recent acquisition of Axon by Integral ends a lengthy period of speculation. Since the days that the likes of Computerland fell into international ownership, there has been conjecture that Axon would be next on the shopping list. That day has now dawned and amid debate about whether the acquisition is good or bad for the industry, we sit and wait for someone to really turn the market on its ear.

Commentators generally reflect on the usual challenges such a merger creates. Who will stay and who will go? What will the new brand look like? How will the front and back office functions be integrated? How will customers be affected?

What I am really interested in is how things pan out in the short-term marketplace. Any smart competitor will know that a merger generates customer uncertainty and that should spell opportunity. During a supplier merger, customers will inevitably feel uncertainty and will more likely be receptive to approaches from potential new suppliers.

Even if a merger is handled well, there is the chance for a sharp competitor to create an air of confusion that fuels any feeling of uncertainty. Sales 101: You plant the seed of doubt and step away allowing the germination process to take place.

If you want to take a more positive approach, now is an ideal time to steal a jump on the competition and reposition yourself in the landscape. It doesn’t matter if you try to secure the “budget” end or the “premium” brand; back yourself and go after a bigger market share.

If you really want to set yourself apart in an over-supplied sector of the market put a stake in the ground, get your team in behind it and put yourself on the line to deliver. If you don’t live up to your promise then give some kind of refund to your client. Radical? Maybe. Point of difference? Yes. Chances are you won’t be giving much away and you will be increasing your brand value exponentially in the process.

In any amalgamation of two companies, cultural issues will always create challenges for the new entity. Don’t let anyone tell you otherwise. A major challenge is getting employees to buy in to the new, “dominant” culture. This doesn’t happen overnight and it can often result in some fairly significant shifts in personnel. This creates another opportunity for competitors. Poaching a staff member may not generally be seen as “cricket”. However, nobody expects employees to retain their loyalty to a team that has effectively disappeared and smaller competitors may be able to offer a attractive company culture to those who are being forced to change.

The reverse is also true. A merger creates a new entity and potentially has the revenue and staff numbers to attract the brightest and best talent – but it is adding even more change to an environment that has already shifted significantly and quickly. Internally, nobody will be looking to rock the boat in the early days of engagement and that brings even more opportunities for competitors to challenge the new company.

The mid and larger mid-market, where Axon and Integral predominantly played, is already cluttered with myriad companies looking to fill the space. Very few of these companies appear to have any real point of difference and I strongly doubt if any of them will seize the opportunity that the merger is handing to them on a plate.

Even in these tight economic times it seems we Kiwis are too “nice” to create a real point of difference on the back of Axon and Integral’s change in circumstances. Instead of the merger delivering an exciting box of liquorice allsorts, we are going to end up with a market still flavoured vanilla , offering different sized servings of “more of the same”.

Bob Pinchin is the director of Sway.tech, a specialist communications house for technology companies. Email: bobp@swaytech.co.nz


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