Fragmented Industry Example
What is the Fragmented industry?
A fragmented industry is one in which there are a large number of small or medium-sized businesses, and no company has a major market share or a clear impact on the industry. Services, retailing, distribution, wood and metal fabrication, agricultural products, and innovative businesses are some examples.
A fragmented market is one in which several companies compete and no single or small group of companies dominates. Because of the industry’s competitive nature, no one corporation has an overly powerful or dominant role in the industry.
Companies seeking to penetrate and eventually conquer a market would find fragmented markets to be perfect targets. Because of the existence of decentralized industries, they frequently have lower entry barriers than more concentrated industries.
A fragmented industry is a term used to describe an industry where the value chain has been broken up into smaller units. There are two types of fragmented industries:
- Horizontal fragmentation
In horizontal fragmentation, there are many small firms in the same field with each company specializing in only one component of the product or service. For example, in software development, we see this type of fragmentation all the time–companies do not work on different components but rather specialize in their own niche areas such as Ruby on Rails programming or front-end design.
- Vertical fragmentation.
Vertical fragmentation refers to when companies have taken over various parts of production–this includes raw materials extraction, manufacturing processes, and assembly lines.
Fragmented Industry Example
The fragmented industry refers to a market where the players are not concentrated and often have product offerings in many different areas, functions, or other spaces. Fragmentation is derived from the word fragmentation. It is created by dividing something into pieces. The term can be used to describe many things such as a product, its ingredients, or even the physical size itself.
An example of a fragmented industry is social media. The players in the industry cannot be defined by one or two brands, but rather there are many competitors ranging from Twitter to Google’s YouTube to Pinterest and Snapchat.
The competition between these companies drives innovation and creates new features that were not originally anticipated by traditional experts such as “traditional advertising agencies”. For example, Twitter’s 140 characters have forced the world of advertising to create more innovative and effective ways of getting a message across in less time.
Another example is the banking industry. Each bank has a different strategy for their customers and the products that they offer. But since most banks are local, it is very difficult to know whether or not those services will be available in the distant future. This means that banks need to be very flexible and innovative in order to maintain a competitive edge.
A company that is the only source of information can quickly fall victim to fragmentation if they fail to accept other industry players. This later leads to a lack of innovation and business growth in that specific industry. The same effect could be caused by the lack of diversity within an industry, which causes new players not only to enter the market but also prevents other existing players from being innovative.
In order to avoid fragmentation, a company can limit its product or service offering within a specific industry. The company can also try to increase the value in each product or service offering in order to keep the value strong and prevent fragmentation.
At some point, the industry is said to be fragmented if there are so many small companies that no one company can dominate. This is known as the competitive intensity or competition intensity of the market. In this case, it becomes more difficult for one single player (also named market leader) to gain profit. However, this is not the only consequence of fragmentation.
A key issue to come up in a fragmented industry is credibility. Companies that have started out in a fragmented industry have already created a product with benefits that they do not want to disclose. This can be related to the use of private data or private information from users.
The companies are reluctant to tell customers what the information will be used for as it would make it easy for potential competitors to infiltrate and take over the market. It also allows them to make their own product more appealing.