Vertical Pulse

Definition of Market Share

Jack Welch, former CEO of General Electric, became famous for demanding that each of GE's business units become the number one or number two players in their industries. If the division managers could not capture the first or second market positions, Mr. Welch would insist that GE divest such businesses.

There are at least two major problems with this strategy. First, the division managers began defining their markets extremely narrowly so that they would be the leader or runner-up in their space. Second, by focusing on too narrow of a market opportunity, business leaders were missing opportunities that would have been discovered if their field of vision was broader.

Residuals Clauses in Mergers & Acquisitions

There is an interesting clause that can be used in mergers and acquisitions. This is the residuals clause which basically says the buyer is not responsible for information that it retains in the heads of its newly-acquired employees after returning the tangible information. A well-written residual clause can eliminate litigation over trade secrets pursuant to a corporate combination.