Thursday, December 11, 2014

When Spin-offs Compete with their Parent Companies

A budding plant would benefit from being attached to its parent plant at the beginning. This connection helps it 'nurse' on resources from the parent plant. As the young plant starts to grow, competition for resources make take place between the young plant and its parent till it reaches a point where it overwinters the benefits the new plant gets from being attached to the main parent plant.

This phenomenon may similarly happen in businesses. When a spin-off from a large corporation is still small, it benefits from being close the the parent company and relies on its network and resources. Later on and as the spin-off grows, its connection with its larger parent corporation provides it with less benefit compared to the competition for resources (clients) it may now start to experience.