Sectors where Herd Mentality is Noticed

Low Cost / Budget Airline Retailing & Multiplexes Telecommunication Insurance Companies News Channels

Mutual Funds
Steel Cement T V Companies

Reasons for Herd Mentality

Sense of security Sense of insecurity Media Hype Present Business is doing very well-Surplus cash Need for Deployment

Present Business not doing well Need to look out for new opportunities
Spirit of competition / ambition to remain at top 3 players Replication of initial success / western Business models / comparison Favourable Govt. rules & regulations Need to Diversify / Expansion

Harvesting

POWER OF 3 COMPANIES Why many companies fail in Herd Mentality?

Phase I :- Stage of Investment & realization that it is long race ahead.
Phase II :- Product is ready, but anticipated demand does not exist, + oversupply comfort zone of profit is lost.

Phase III :- Competition / Entry of established players + MNCs.

Phase IV :- Hypercompetition. Sustaining losses is a strategy. Phase V :- Consolidator / Mergers / Acquisitions / Takeover / Harvesting. Phase VI :- Power of 3 is established.