Captive Strategy – Is the giving up of independence in exchange for security. A company with a weak competitive position may not be able to engage in a full blown turnaround strategy. The industry may not be sufficiently attractive to justify such an effort from either the current management or from investors. Nevertheless a company in this situation faces poor sales and increasing losses unless it takes some action. Management desperately searches for an “angel” by offering to be a captive company to one of its larger customers in order to guarantee the company’s continued existence with a long term contract. In this way, the corporation may be able to reduce the scope of some of its functional activities, such as marketing, thus reducing costs significantly.

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