Although acquiring related businesses can enhance the bargaining power of a corporation,there is a risk of retaliation by competitors that can result in a diminishing of the desired bargaining power.

Question

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When PepsiCo diversified into the fast-food industry with its acquisitions of Kentucky Fried Chicken, Taco Bell, and Pizza Hut, it clearly benefited from its position over these units that served as a captive market for its soft-drink products. However, many competitors, such as McDonalds, refused to consider PepsiCo as a supplier of its own soft-drink needs because of competition with Pepsi divisions in the fast-food industry. McDonalds did not want to subsidize the enemy. Thus, although acquiring related businesses can enhance corporation bargaining power, the corporation must be aware of the potential for retaliation.

Although Acquiring Related Businesses Can Enhance the Bargaining Power of a Corporation,there