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Fragmented Industry

Fragmented industries have many small competitors and have structural factors that inhibit concentration. The reasons for the fragmentation may include:

1. Low barriers to entry.

2. Highly specialized market for goods and services requires extreme specialization by firms.

3. High transportation costs.

4. Lack of standardization, or lack of need for it.

5. High need for trust and local firms often inspire more trust in their customers.

Strategy options include: Decentralize operations and hire professional local managers; Construct and operate “formula” facilities; Become a low-cost producer; Provide more service with the sale and add value to the customer; Increase customer value via vertical integration; Specialize by product type; Specialize by customer type; Operate "bare bones/no frills" business; Focus on a limited geographic area.

Examples of fragmented industries:

1. Book publishing

2. Landscaping and plant nurseries

3. Auto repair.

4. Restaurant industry

5. Clothing retailers

6. Meat markets, butchers (custom slaughter)

7. Barbers

8. Furniture

9. Cement/bulk building supplies. Extremely expensive to ship nationally, and are not difficult to manufacture locally.

10. Agriculture

11. Computer components/hardware retail

12. Construction




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