The article argues that companies should think carefully before responding to a rival's merger activity by pursuing major acquisitions of their own. It is noted that such hastily-arranged deals are often not well-considered, can come at a steep price if a bidding war breaks out, and frequently involve less-than-optimal target firms. Several alternative strategies are discussed including strategic retreat from peripheral markets, focusing more on innovation and organic growth, and building a counterposition by means of multiple small acquisitions. INSETS: WINNING THE BATTLE . . .;. . . BUT LOSING THE WAR..