Companies Propagating as Plants

Some plants propagate by extending their roots laterally then shooting up stems. The plant actually grows using such method and the growing number of stems are actually interconnected at the ground level through an extensive system of interconnected roots. At first, the budding shoot is dependent on the parent plant for nutrition and support. As the shoot grows, it can becomes less dependent on the parent plant and can survive on its own even if the connection to its parent plant was severed through the roots.

Similarly, in the business world, a company may grow by setting off new ventures in different sectors. The new spin-offs may be dependent at first on the parent company but then grow less dependent with time. They might ultimately reach a point where they are completely independent of the parent company and can survive on their own.

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.