Creative destruction occurs when economic factors remove organizations that have become inefficient.

For example, Dell’s direct-marketing model drove IBM to sell its personal computer business to Lenovo Group, a Chinese company. That acquisition will eliminate inefficient competitors in China, or, if the acquisition was unwise, creative destruction will reduce or remove the Lenovo Group.

However, creative destruction will occur only if the Chinese government allows capitalistic market

, forces to operate in China. If not, China will compete at a disadvantage on the world’s markets, ultimately to its own disadvantage. LO.1