Rule of Three

Rule of Three

Rule of Three Jonathan Poland

The rule of three is an economic theory that posits that large, mature markets tend to be dominated by three major competitors. This theory suggests that in an industry with many competitors, there will be a process of consolidation through mergers, acquisitions, and other shakeouts, which will result in the emergence of three dominant firms.

According to the rule of three, a firm that dominates an industry with few competitors may become vulnerable to new competition. This is because large, dominant firms often become less responsive to customer needs and less innovative, creating opportunities for other firms to enter the market and challenge their dominance.

In general, the rule of three suggests that markets tend to evolve towards a state of equilibrium with three dominant players, each vying for a share of the market. These three firms may be able to sustain their positions through economies of scale, strong brand recognition, and other advantages. However, the rule of three does not dictate that these three firms will remain dominant indefinitely, as market conditions and technological advances can disrupt the status quo and create new opportunities for other firms to emerge as leaders.

Learn More…

Retrenchment Strategy Jonathan Poland

Retrenchment Strategy

Retrenchment is a business strategy that involves reducing the size or scope…

Types of Revolution Jonathan Poland

Types of Revolution

A revolution is a sudden and significant change to the structure and…

Supply Risk Jonathan Poland

Supply Risk

Supply risk refers to the likelihood that a disruption in the supply…

What is an Exit Interview? Jonathan Poland

What is an Exit Interview?

An exit interview is a formal meeting or conversation that takes place…

Productivity Jonathan Poland

Productivity

Productivity is a measure of how efficiently resources are used to produce…

Gap Analysis Jonathan Poland

Gap Analysis

A gap analysis is a method used to determine the distance between…

Decision Tree Jonathan Poland

Decision Tree

A decision tree is a graphical representation of a decision-making process. It…

Channel Management Jonathan Poland

Channel Management

Channel management refers to the process of coordinating and optimizing the distribution…

Risk Management 101 Jonathan Poland

Risk Management 101

Risk management is the process of identifying, assessing, and mitigating potential risks…

Jonathan Poland © 2023

Search the Database

Over 1,000 posts on topics ranging from strategy to operations, innovation to finance, technology to risk and much more…

Types of Process Jonathan Poland

Types of Process

A process is a systematic, controlled, and repeatable way of working that…

Market Risk Jonathan Poland

Market Risk

Market risk is the possibility that the value of an investment will…

What is Leadership? Jonathan Poland

What is Leadership?

Leadership is the act of guiding and directing a group towards a…

Subscription Model Jonathan Poland

Subscription Model

A subscription model is a pricing and revenue strategy in which customers…

Window of Opportunity Jonathan Poland

Window of Opportunity

The window of opportunity is a concept that refers to a limited…

Continuous Production Jonathan Poland

Continuous Production

Continuous production is a method of manufacturing in which materials and parts…

Value Added Reseller Jonathan Poland

Value Added Reseller

A value added reseller (VAR) is a company that buys products from…

Cost Benefit Analysis Jonathan Poland

Cost Benefit Analysis

Cost-benefit analysis (CBA) is a systematic approach to evaluating the costs and…

Research Types Jonathan Poland

Research Types

Research is the process of systematically seeking and interpreting knowledge through inquiry,…