Competitive Strategies and Exit Decisions in Oligopolies
University of South Florida
September 2, 2009
We examine corporate exit resolutions, including the decisions to merge, to be acquired, and to file for bankruptcy, as a result of long-term deployment of generic competitive strategies among rival firms. We construct a theory that forecasts diverse exit outcomes and demonstrate its predictions within the U.S. automotive industry. We find that unless competitors split the market into separate niches, a clash between firms that utilize a single competitive strategy causes the less efficient ones to go bankrupt, and firms that utilize different competitive strategies throughout their going-concern stages are generally more sustainable than those deploying only a single strategy.
Keywords: Exit Decisions, Bankruptcy, Merger, Acquisition, Porter’s Competitive Strategies, Cost Leadership, Product Differentiation, Focus, Pooling/Separating Equilibrium
JEL Classification: A12, D41, D43, D58, D74, G33, G34working papers series
Date posted: June 8, 2010
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