Corporate-level strategy: horizontal integration, vertical integration, and strategic outsourcing.
Determine where you see this sort of activity going on, and what you might think the strategic logic behind it may be. (200 words)
Amazon announced it was "planning to buy the rights of archive titles and new books in a bid to boost its margins by cutting out the "middle men" publishing houses whose books it sells online" (Worstall, 2012). Netflix recently released a self-produced series, "The House of Cards". Delta Airlines bought an oil refinery from ConocoPhillips "to offset the risk of higher jet fuel prices" (Mouawad, 2012). In each of these cases companies are working to protect supply, eliminate a layer of costs, and work towards better control of their own destiny. A common example can be seen on the shelves of most grocery stores when companies offer private label products, which allow them to offer a comparable product to that of the brand name without paying for the major brand's marketing and promotion or following their display constraints. In addition, in the case ...
This detailed solution explains horizontal integration, vertical integration, and strategic outsourcing with examples and APA formatted references.
Strategic Management: Integration, merger vs acquisition,
1. Porter (1985) noted that a firm is "stuck in the middle" if they try to both differentiate their products/services and compete on low-cost. However firms like Wal-Mart, Southwest Airlines, and Home Depot, use exactly that strategy and are quite successful. Why? Or coudl they be more successful is they got out "of the middle"?
2. Describe the risks associated with horizontal integration, vertical integration, concentric diversification, and conglomerate diversification. Why is a concentration strategy considered less risky?
3. What is the difference between a merger and an acquisition? Which seems riskier? Why?
4. Why would a firm use joint ventures, strategic alliances, and outsourcing? How do these strategies reduce risk?
5. Mergers and Acquisitions are once again becoming "popular" - explain!View Full Posting Details