Strategic Deterrence Essay Example | Topics and Well Written Essays - 1750 words

Strategic Deterrence - Essay Example Clearly analyzing the effect of the multipoint contact on firms strategic moves change according to the level of competition of the rival firm. Strategic deterrence may sound somewhat negotiating between the companies or the firms but ideally speaking it really reduces the risk of incurring losses. Not only that it also helps reduce excessive manpower used if deterrence is not abided. The concept of Strategic deterrence all begins with the primary intention of saving the market from multi market competition battle, which can ultimately bring stability among multi markets. Strategic deterrence is not accepted the moment the multi market contact start to encroach the others market but it is just an understanding that too mutually agreed up activity, which after incurring substantial amount of losses from the companies involved. This situation comes when firms start loosing customer base, profit on sales and the business tending to break-even point, which is generally referred as no profit and no loss point. This position comes when the situation is from a very long time. Though Strategic deterrence is mutually agreed concept is in deed an unwilling act on behalf of the companies involved. It ensures no loss concept but never promises profits out of the deterrence. Strategic deterrence may be a positive attitude but is accepted only by small or medium companies but not by large multi national companies. Its implications on the multi markets are not only largely understood but are but are being analyzed to overcome the disadvantages due to the market encroachment. The markets un touched by this phenomenon is the monopoly market which stands high on sales and profit yet not letting any one step into its market. This is the only market, which does not... The researcher states that today, many companies may compete in some other field, but try to avoid competing in the respective fields. This deterrence is only to avoid incurring losses, unnecessary from his competitor. The competitor may be a weak party, but still would be unwilling to compete. This strategy is primarily to avoid losses during industry shake out for any particular product. It is also stated that some firms compete while others forbear from competing with their ‘multipoint’ rivals — those faced in more than one market or market segment. According to the study it is clear that multi point contact may effect only within the same products or services but not between the strategic groups. There are many speculations that whether multipoint contact deters competition depends on strategic objectives. These predictions are often supported by estimates made by market exit rates. There are many indications and proofs that weak competitors can out survive st rong competitors due to forbearance. This essay aims to presents such proofs. The researcher then concludes that he had a concern that is deeply rooted towards competitive dynamics perspective support the mutual forbearance and resource dissimilarity theories of competitive behavior. Hence, from the essay detailed discussion the concept of mutual forbearance and strategic deterrence is clearly analyzed, theorized and to the possible extent gave enough validations which can bring these concepts and implications to a better understanding.