M&A and partnership deals are at an all-time high. But what about competition?
How Mergers Change the Way Your Company Competes
Five types of competition are common in business today. Each type gives rise to certain kinds of deals, and these deals in turn can reshape the pattern of competition. Horizontal competition occurs when firms compete in the same market — this is the type of competition that comes to mind most often. Vertical competition occurs when firms compete downstream with their buyers or upstream with their suppliers over the surplus produced in their transaction. Disruptive competition includes the rise of a technology or business model that upends the existing order in an industry. State-sponsored competition involves state-owned enterprises or industrial policies that support national champions. Finally, in collective competition firms cooperate with each other in groups to compete against other firms or other groups. Alliances short of mergers are used to coordinate the businesses of the firms that are members of these groups.