Rita McGrath

Multimarket Maneuvering in Uncertain Spheres of Influence: Resource Diversion Strategies

Coauthor(s): Ming-Jer Chen, Ian MacMillan.

Abstract:
Firms competing in multiple markets find equilibrium through spheres of influence and mutual forbearance, but imperfect competitive information may give one firm an incentive to influence rivals' behavior and uncover information. We suggest that a firm's resource allocations can divert competitors' resource allocations, enhancing the firm's own sphere of influence without precipitating a destructive all-out war. We define the stratagems thrust, feint, and gambit, and conclude that corporate strategy decisions can only be imperfectly understood if competitive interaction is not taken into account.

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