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Integration strategies
Combining activities related to present business process of the firm Refers to the Value Chain Expansion through integration -- in adjacent business and results in serving the same set of customers.
Why Integrate ??
Make of Buy analysis.. Types of Integration Horizontal Integration Vertical Integration
Horizontal Integration
Takeover or acquisition of similar firms operating at same stage. Normally it is a geographical expansion
Benefits of H I
Reduce costs Increased Value through a wide range of bundled products Reducing industry rivalry Increased Bargaining power
Limitation of HI
No evidence of value creation Attracts attention of regulation
Vertical Integration
When a firm deals in business to serve its own needs A firm expands either to supply inputs or to distribute its products. So it resorts to .. Forward I and Backward I Besides this, there are two types.. Full Integration and Taper Integration
Advantage of V I
Builds barrier to entry Protects product quality Improves scheduling
Disadvantage of V I
Cost Disadvantages Technological change Demand unpredictability
Diversification
Dependence on a single industry makes a firm vulnerable, hence firms diversify Process of adding new business that are distinct from established operations Involves two or more distinct businesses It means new products for new markets
Types of diversification
1) Related Diversification two types a) Market Related D b) Technology related D 2) Unrelated Diversification
Risks of Diversification
Unrelated diversification may lead to unsuccessful ventures Dissimilar skill sets a risk High costs of diversification
Types of Mergers
Horizontal M Vertical M Concentric Conglomerate(collection)