Question

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

Answer 1

Answer:

The correct answer is C

Explanation:

Consolidation strategy is the stage or the phase in the company or the industry lifecycle, where the segments or parts in the company or in the industry begin to merge.

Business mostly consolidate in order to gain the larger portion of the market share so as to take the benefit of synergies.

In short, this strategy, states the acquisition and merger of the smaller companies into a much larger for the economic benefit.

So, in this case, the Magnet adopted or followed the strategy of consolidation.

Answer 2

Answer:

c. consolidation strategy

Explanation:

Consolidation Strategy: It is a strategy of merging and acquiring different companies to form a single company for economic benefit and gain competitive advantage. It increase scale and scope of the company by mean of technologies, infrastructure, skills, etc. Sometime these strategy are used to gain geographical benefit. Several businesses are consolidated to form a larger organization.

In the given case, Magnet Inc. have acquired rivals to form a bigger organization that acquire a monopolistic market power in the declining industry.