Why Eliminating Rivals is a Risky Strategy
In the January 2008 Harvard Business Review Michael Porter updates his five forces model and discusses merger and acquisition strategies merely designed to eliminate rivals (rather than improve cost or quality) are risky.
Based on the five forces model, the reduced competition should increase industry profitability in the short term. However, the additional profits often attracts new competitors and a backlash from customers and suppliers.
For more information, see all articles on: Industry Analysis See also:
The Intelligent Investor: The Classic Text on Value Investing
Financial Statement Analysis: A Practitioner's Guide, 3rd Edition
Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series)
