What is the containment strategy?

What will be an ideal response?

The containment strategy works well when the firm has identified the threat at an early stage. Although firms
sometimes select one of these strategies, they typically resort to a combination that aligns well with their particular
resources and capabilities. American Airlines, for instance, can compete with Southwest not only by increasing the
benefits of its frequent flier program but by using its bargaining power to secure more exclusive airport gates (thus
effectively raising Southwest's distribution costs at airports where it used to share gates with American). Similarly, a
large consumer-products company can release a copy-cat product that both leverages the new market created by a
competitor and can be sold through its own existing channels. Consider, for example, the fact that retailers in
industries from clothing to groceries typically charge slotting fees--fees that suppliers pay for access to retailers'
shelf space. Because of this practice, any new product may bump an existing product from retail shelves, and if the
one that gets bumped is a new entrant's only product, the containment strategy will have been highly effective.