Critics also charge that companies' marketing practices can harm other companies and reduce competition. Three problems sire involved: acquisition of competitors, marketing practices that create barriers to entry, and unfair competitive marketing practices. Critics claim that firms are harmed and competition reduced when companies expand by acquiring competitors rather than by developing their own new products. In the car industry alone there has been a spate of acquisitions over the past decade: General Motors bought the British sports-ear maker, Lotus; Ford acquired 75 percent of Britain's Aston Martin, which makes hand-built, high-performance cars, and Jaguar; Fiat absorbed Ferrari; BMW has taken over the Rover Group; Volkswagen controls Skoda." These and many large international acquisitions in other industries, such as food, telecommunications, and pharmaceuticals have caused concern that more arid more competitors will be absorbed and that competition will be reduced.
The acquisition is a complex subject. Acquisitions can sometimes be good for society. The acquiring company may gain economies of scale that lead to lower costs and lower prices. A well-managed company may take over a poorly managed company and improve its efficiency. An industry that was not very competitive might become more competitive after the acquisition. But acquisitions can also be harmful and arc therefore closely regulated by the government. Critics have also claimed that marketing practices bar new companies from entering an industry. The use of patents and heavy promotion spending can tie up suppliers or dealers to keep out or drive out competitors. People concerned with anti-trust regulation recognize that some barriers are the natural result of the economic advantages of doing business on a large scale. Other barriers could be challenged by existing and new laws. For example, some critics have proposed a progressive tax on advertising spending to reduce the role of selling costs as a substantial barrier to entry.
Marketing's Impact on Other Businesses