Corporate Strategy Vs Vertical Integration Strategy

When a certain point is reached regarding a company’s success, a set of different opportunities arise and partnerships may unfold. However, with every possible strategy available, risks and benefits also come into play; without discarding any of them beforehand, every option is a strong candidate until a final decision is made. In this case study we will analyze the current business strategy pertaining

Due to the growing competition and diminishing market share, companies are opting for different strategies to achieve their survival objectives as well as growth. Companies are thus executing grand strategies to provide their businesses with a clear direction for its strategic actions. These strategies, therefore, aim at both short term and long term sustainability and growth, and they include innovation, market development, product development, and concentration.

In the 1900s and early 2000s, the United States started the integration movement to improve the efficiency and effectiveness of the health care delivery system. The integrations system was designed to introduce various strategies that healthcare organizations use to achieve the diversification in their services. However, these policies have helped the health care system to gain market share, become more diversified, reduce competition, and increase cost advantages by using existing operation to offer new products or services (Shi & Singh, 2015).

Chapter 6 – Strategy Formulation: Situation Analysis and Business StrategyChapter 7 – Strategy Formulation: Corporate StrategyChapter 8 – Strategy Formulation: Functional strategy and Strategic Choice

The competitive forces that shape company strategy are very important to consider in any organization. However, they are especially important when an organization’s forces fall closer to the “intense” side on the scale between “intense forces” and “benign forces.” “Almost no company earns attractive returns on investment” when forces are intense, like those in industries that sell luxury goods. (Porter, 2008). Yet, Robert Mondavi’s wineries have leveraged the five forces (barriers to entry, bargaining power of suppliers/buyers, threat of substitutes, and competitive rivalry) in order to maintain consistent profits. The five forces are discussed in detail below with the level of importance increasing throughout the descriptions.

To develop such strategy mix of strategic options will be applied including Integration to deal with competition and Intensive + Diversification strategies for product and market development.

Corporate-level strategies are liable for market definition; they address the entire scope of the business. This strategy helps a business to diversify its service. It gives them direction in which geographic region they should operate and which service markets to strive in. “Thus, an effective corporate-level strategy creates, across all of a firm’s businesses, aggregate returns that exceed what those

Strategy formulation has been acknowledged as one of the most crucial factors of ensuring the long-term growth of the business. However, the manner in which strategy is formulated, and most importantly, the nature of the strategy chosen for the company determines its future position in the marketplace (Grant, 2005).

Nevertheless, the vertical value chain created by Aldi benefits the company’s corporate strategy. To be a local supplier,

Horizontal integration is the addendum, of other business activities at same standard of the value chain. This is when the production corporation the property of the means of output, distribution and exhibition of the film by the same company, because of this they receive all of the profit. For example: the standard Oil company buying 50 refineries, another example: a radio station also owns a newspaper and magazine.

By producing the part that is unique for our company, we no longer have to rely on the larger companies to manufacture the part that allows our company to utilize a unique part easily. The main advantage of vertical integration for our company is that, we have more control over the value chain, particularly when we acquire or develop a manufacturing a unique part, we get more control over the production and cost of the part throughout the distribution process. We are essentially bypassing the service market completely and doing it by ourselves. We are engaged in a vertical integration when any time we shun other suppliers and choose to produce a part internally

In 1982 they began selling outside UK (sales to Europe & Australia reached 300000 sterling)

The single and dominant business strategy, which denote relatively low levels of diversification, more fully diversified firms are classified into related and unrelated categories. A firm is related through its diversification when there are several links between its business units; for example, units may share products or services, technologies, or distribution channels. The more links among businesses, the more constrained is the relatedness of diversification. Unrelateness refers to the absence of direct links between businesses.

 In general, manager’s look at competition has been too narrow. There is a broad set of competitors that need to be looked at, which are described in “The Five Competitive Forces That Shape Strategy” by Michael E. Porter. The model explains that there are several other forces in the competition for profits that the strategist should be aware of when forming a stagey. Those forces determine the profitability of the industry and are the most important to look at when you are forming a strategy. These five forces are are the “industry structure” model which contain: New Entrants, Suppliers, Buyers, Substitutes, and Existing Competitors.

Take a look at Canon, its strategies over the years have been very effective in balancing growth of market share and profit in the imaging industry which made Canon a leader in the imaging industry group. Other than the imaging industry, Canon also took a piece of pie in business machines (printer, photocopier) markets and industry machines (semiconductor production equipment, medical equipments…etc) markets (see Picture 2.1). Canon has since late 1960s been focusing on strategic planning process, gradually expanded its business into business machines market and adopting a corporate level strategy of horizontal diversification based on its core competencies. Such continuous development and adoption of various strategies keeps