When the market for standalone Global Positioning System (GPS) devices declined with the arrival of GPS-enabled mobile phones, Magnet Inc., a manufacturer of GPS devices, bought out most of its rivals that were planning to exit. This allowed the company to get rid of all the excess capacity and acquire a monopolistic market power in the declining industry. Which of the following strategies has Magnet adopted in this scenario?
A) harvest strategy
B) maintain strategy
C) consolidation strategy
D) differentiation strategy

Question

Quizplus · Accepted Answer

In the scenario, Magnet Inc. has adopted the consolidation strategy. Although market size shrinks in a declining industry, some firms may choose to consolidate the industry by buying rivals (those who choose to exit). This allows the consolidating firm to stake out a strong position-possibly approaching monopolistic market power, albeit in a declining industry.

When the Market for Standalone Global Positioning System (GPS) Devices