Integration strategies

Corporate Level Strategies

Prepared By

Kindly restrict the use of slides for personal purpose. Please seek permission to reproduce the same in public forms and presentations.

Manu Melwin JoyAssistant Professor

Ilahia School of Management Studies

Kerala, India.Phone – 9744551114

Mail – manu_melwinjoy@yahoo.com

Integration strategies

Integration strategies

• It is done where the company attempts to widen the scope of its business definition in such a manner that it results in serving the same set of customers. The alternative technology of the business undergoes a change.

Integration strategies

• It is combing activities related to the present activity of a firm. Such a combination may be done through value chain. A value chain is a set of interrelated activity performed by an organization right from the procurement of basic raw materials down to the marketing of finished products to the ultimate customers.

Vertical Integration

• When pursuing a vertical integration strategy, a firm gets involved in new portions of the value chain. This approach can be very attractive when a firm’s suppliers or buyers have too much power over the firm and are becoming increasingly profitable at the firm’s expense.

Examples of Vertical Integration

• Oil companies like ConocoPhillips can be involved in all stages of the value chain, including crude oil exploration, drilling for oil, shipping oil to refineries, refining crude oil into products such as gasoline, distributing fuel to gas stations, and operating gas stations.

Forward Integration

• When pursuing a vertical integration strategy, a firm gets involved in new portions of the value chain. This approach can be very attractive when a firm’s suppliers or buyers have too much power over the firm and are becoming increasingly profitable at the firm’s expense.

Examples of Forward Integration

• Disney has pursued forward vertical integration by operating more than three hundred retail stores that sell merchandise based on Disney’s characters and movies. This allows Disney to capture profits that would otherwise be enjoyed by another store.

Backward Integration

• When pursuing a vertical integration strategy, a firm gets involved in new portions of the value chain. This approach can be very attractive when a firm’s suppliers or buyers have too much power over the firm and are becoming increasingly profitable at the firm’s expense.

Examples of Backward Integration

• Ford Motor Company created subsidiaries that provided key inputs to vehicles such as rubber, glass, and metal. This approach ensured that Ford would not be hurt by suppliers holding out for higher prices or providing materials of inferior quality.

Horizontal Integration

• It is a type of integration strategies pursued by a company in order to strengthen its position in the industry. A corporate that implements this type of strategy usually mergers or acquires another company that is in the same production stage.

Example of Horizontal Integration

• One example of horizontal integration is what happened between the infamous Daimler Benz and Chrysler merger (car developing, manufacturing and retailing).

Acquisition

• An acquisition takes place when one company purchases another company. Generally, the acquired company is smaller than the firm that purchases it.

Examples of Acquisition

• Disney was much bigger than Miramax and Pixar when it joined with these firms in 1993 and 2006, respectively, thus these two horizontal integration moves are considered to be acquisitions.

Merger• A merger is a combination

of two or more organizations in which one acquires the assets and liabilities of the other in exchange for shares or cash or both the organization are dissolved and the assets and liabilities are combined and new stock is issued.

Examples of Merger• Big oil got even bigger in

1999, when Exxon and Mobil signed a $81 billion agreement to merge and form Exxon Mobil. ExxonMobil remains the strongest leader in the oil market, with a huge hold on the international market and dramatic earnings.

Strategic Alliance

• A strategic alliance is a

cooperative arrangement

between two or more

organizations that does

not involve the creation

of a new entity.

Examples of Strategic Alliance

• In June 2011,Twitter

announced the formation of

a strategic alliance with

Yahoo! Japan. The alliance

involves relevant Tweets

appearing within various

functions offered by Yahoo!

Japan.