An industry composed of a large number of small- and medium-sized companies.

A strategy designed to obtain the advantages of cost leadership by establishing a network of linked merchandising outlets interconnected by information technology that functions as one large company.

A strategy in which the franchisor grants to its franchisees the right to use the franchisor’s name, reputation, and business model in return for a franchise fee and often a percentage of the profits.

One in which large numbers of customers enter the market.

The strategy of “filling the niches” or catering to the needs of customers in all market segments to deter entry by competitors.

Charging a price that is lower than that required to maximize profits in the short run to signal

to new entrants that the incumbent has a low-cost structure that the entrant likely cannot match.

Incumbent companies deterring entry by investing in costly technology upgrades that potential entrants have trouble matching.

Investments that signal an incumbent’s long-term commitment to a market or a segment of that market.

The process by which companies increase or decrease product prices to convey their intentions to other companies and influence the price of an industry’s products.

When one company assumes the responsibility for determining the pricing strategy that maximizes industry profitability.

The use of product differentiation strategies to deter potential entrants and manage rivalry within an industry.

The creation of new or improved products to replace existing products.

When a company searches for new market segments for its existing products in order to increase sales.

When a company develops strategies to become the dominant player in a declining industry.

When a company focuses on pockets of demand that are declining more slowly than the industry as

a whole to maintain profitability.

When a company reduces to a minimum the assets it employs in a business to reduce its cost structure and extract (“milk”) maximum profits from its investment.

When a company exits an industry by selling its business assets to another company.