Please read and respond to the attachment(s). Note: Only up to 20% of the written response content can be quotes from third parties.U4Dis_Det_Rplx2.docx
Please read and respond to the attachment(s).
Note: Only up to 20% of the written response content can be quotes from third parties.
Assignment Details:
· Please reply to the presented statement(s) below.
Deliverable Length: 250 words (minimum) per reply
Horizontal integration is the merger of two companies that produce the same type of products or services, or merging two departments within the same organization. Vertical integration “the combining of manufacturing operations with the source of materials and/or channels of distribution under a single ownership or management specially to maximize profits.” (Merriam-Webster, 2020)
Horizontal integration is a benefit because the two companies are able to combine their resources and increase production and possibly reduce costs on to the customers. I work for Evergy an electric company that was formed by West Star energy of Kansas and Kansas City Power & Light of Missouri merging together, they say that they are better together than they were standing alone.
Vertical integration helps the company control the price of producing the complete product and the costs of the material needed to complete the product. My example of vertical integration is Netflix they started out as a DVD rental company and now show seasons of television programs as well.
When a company decides to add to the market, whether it be with a new product or by new services. This leads to having concentric diversification with the goal of having a strategy fit and allow the organization to achieve synergy (the ability of two or more parts of the organization to achieve an effectiveness they would not have achieved on their own). They can achieve synergy by combining the firm’s marketing, financial, operating or management efforts. Another diversification strategy to consider is coagulometric diversification (this is when you are using vertical integration). The primary purpose is to improve the organizations profitability by acquiring the corporation or firm. Some of the common reasons of pursuing coagulometric diversification are the growth rate and opportunities. When a corporation decides to pursue a diversified strategy, they need to know whether they want to go into a related or unrelated business to what they are currently involved in. (Wendy H. Mason, 2020)
Global strategy gives an organization the ability to get their product exposed to a larger audience, market, improves the life cycle of the product, makes the company be more resilient against local competition, helps the world to progress and reduce global poverty.
The disadvantages of having a global strategy can include: cultural influences, operational risks, higher obligations, trade barriers, shifts the primary work force, and greater influence on political arena. (Brandon Gaille, 2015)
It would not be viable to open your business in a country that your product goes against their culture and beliefs if you are unable to alter your product to fit into their culture and beliefs. For example, McDonald’s had to alter their menu to fit with India’s beliefs and culture. India is against eating beef so they had to use more chicken and other meat that they do eat in order to strive in India.
References:
Brandon Gaille, (Sep 13, 2015), 12 Pros and Cons of Globalization Strategy, BRANDONGAILLE.COM, retrieved from: https://brandongaille.com/12-pros-and-cons-of-globalization-strategy/#:~:text=A%20globalization%20strategy%20gives%20an%20organization%20the%20chance,makes%20the%20company%20more%20resilient%20against%20local%20competition
Mason Wendy H., (2020), DIVERSIFICATION STRATEGY, Advameg, Inc., retrieved from: https://www.referenceforbusiness.com/management/De-Ele/Diversification-Strategy.html
“Vertical integration.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/vertical%20integration. Accessed 25 Nov. 2020.
TWO:
Compare and contrast vertical and horizontal integration. What are some of the variables that make each of these integrations valuable? Provide an example of a vertical and a horizontal integration that has happened recently.
Vertical versus horizontal integration are both ways a company can grow but they are very different. Horizontal integration is where one company acquires another company in the same line of service at the same level of that service, or supply chain. Whereas, vertical integration is an acquisition of another company that is in the same line of business but at a different level of service or point in the supply chain. Some elements to consider for horizontal integration are: is the industry growing, does the target of the acquisition have a weakness such as financial resources, will the acquisition provide a significant boost to profits? Things to consider for vertical integrations are: will the integration provide profit increase by gaining the additional operational control of the supply chain, will the integration decrease the power of suppliers, and will this also decrease costs of doing business in the industry in question? Either can provide a significant growth opportunity if these factor are studied (Moltz, 2019).
An example of a recent horizontal integration is the T-Mobile acquisition of Sprint. This was a horizontal integration because both companies were cellular service providers.
References:
Moltz, B. (2019, January 3). Should You Expand Through Horizontal and Vertical Integration? Retrieved from https://www.americanexpress.com/en-us/business/trends-and-insights/articles/should-you-expand-through-horizontal-and-vertical-integration/
THREE:
Vertical integration in microeconomics management and international political economy refer to an arrangement in which the supply chain of an organization is integrated and owned by that company. as an example consolidation of 787 Dream-liner jet from Washington to South Carolina before The Boeing company manufacturer 787 jet in two location WA and SC at the same time they want decrease the production cost transportation, electricity, labor and get used only single assembly line in South Carolina for more profit.
Diversification is a growing strategy that include entering in to the new market or industry for expanding nationally and international that your business do not currently operate or probably creating new products or service line that organization currently do not offer that one. the easiest way to diversify your portfolio is with asset allocation funds these are funds with a predetermined mix of stock and bonds like A 60/40 fund which mean 60% of stock and 40% bonds or cash allocation.
A global strategy for a company are direct guide for globalization business connected around the world allows business revenue to do not be confined by borders. A business can employ a global business strategy to reap the rewards of trading in the worldwide market for example the luxury products of company Gucci sells essentially the same products in every country.
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