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| Author: | Wood, A. |
| Title: | Capacity rationalization and exit strategies |
| Journal: | Strategic Management Journal
2009 : JAN, VOL. 30:1, p. 25-44 |
| Index terms: | industries management capacity markets exit conditions strategy small business manufacturing case studies United Kingdom |
| Language: | eng |
| Abstract: | As a response to excess capacity (hereafter as: cap.) in a small competitive industry, a case study allows for a generalization of Bower's concentration hypothesis. Exit barriers were generating a free rider problem with only smaller and lower quality brick plants shutting down despite the efficient solution demanding for major closures. The exit logjam was resolved by the strategic actions of growth-maximizing managers using major acquisitions as the basis for substantial reductions in firm and industry cap. while growing their own market share. The fall in industry cap. made it possible for other firms to follow suit while maintaining their market share as predicted by prospect theory. |
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