Abstract

The decade of the 1980s saw many industries encounter very hostile markets, where too many competitors seek too few customers. Margins fall under the pressure of predatory price discounting. Market shares shift, at first quickly due to price differences and slower later due to other factors. Companies respond by proliferating products and services. Some companies weaken themselves with ill-advised cost reduction programs. The industry undergoes several waves of consolidation that, ironically, intensify rather than ease the industry's plight. After a period of years, the industry emerges from tough times, often due to a notable pick up in demand. Few companies do well in such a hostile environment. Those that do prosper in these markets follow policies that acknowledge this evolutionary pattern with management policies that attract customers and that discourage competitors.