This article was originally published in The Bangkok Post.
Bigger is not always better when it comes to succeeding in business. Who, for example, makes the most money producing tyres? It's not Bridgestone, the industry's global scale leader. Germany's Continental AG takes home three times more profit than Bridgestone and is far and away the tyre industry's economic leader. How? What the smaller company lacks in scale it makes up for with lower manufacturing costs and a more lucrative customer mix.
A lot of corporate strategy revolves around building scale, and for good reason. The largest companies enjoy huge advantages: They can spread costs over the widest base, wield the most market influence and benefit from the most accumulated experience.
Written by Nicolas Bloch and James Hadley, co-leaders of Bain & Company's Strategy practice; and Sharad Apte, a partner with the Strategy practice in Bangkok.