Shakeout: meaning, definitions and examples

Economic History

• The term emerged in the 20th century during downturns when many businesses collapsed while only strong ones survived.
• In the 2000s, the tech industry experienced a major shakeout after the dot-com bubble burst, leading to numerous startups shutting down.
• Shakeouts often follow market booms, where excessive competition forces out less efficient players.

Business Strategy

• Companies often undergo a shakeout phase to refine their products and identify their core strengths against competitors.
• Investors usually observe a shakeout as an opportunity to buy into companies that are likely to emerge stronger post-downturn.
• During a shakeout, remaining companies may consolidate resources, potentially leading to monopolistic tendencies in the market.

Cultural References

• The concept of shakeouts can be seen in films about corporate takeovers and struggles, reflecting on survival in competitive markets.
• Books and articles on entrepreneurship often discuss the inevitability of shakeouts, emphasizing how they clear the path for innovation.
• Popular media sometimes oversimplifies shakeouts, focusing on dramatic narratives rather than the nuanced economic impacts.

Psychology

• The stress associated with a shakeout can lead to survival behaviors among businesses, influencing decision-making processes.
• Stakeholders often exhibit increased anxiety during shakeouts, impacting their investment decisions and market outlook.
• The aftermath of a shakeout can trigger a resilience effect, where surviving companies adapt better to future challenges.