VERTICAL INTEGRATION 1.

Backward integration
Amazon.com Amazon.com backward vertically integrated when it became not only a bookseller but a book publisher. As a bookseller, Amazon.com buys books from various suppliers, such as publishing companies. By becoming a publisher itself, it has integrated into its business the role of supplier and can sell books that its own publishing company publishes. Backward Vertical Integration as Strategy for Amazon.com Booksellers set the price at which Amazon.com can buy a book from them. This in turn limits the amount that Amazon.com can charge a customer for a book and still make a profit. If Amazon.com publishes the book itself, it can acquire its books cheaper, as its publishing arm does not need to produce a profit as an independent publisher would. Additionally, while a publisher normally would sell its books to a variety of booksellers, Amazon can choose whether to sell the books it publishes to other bookstores or sell its books only through Amazon.com. In this way, it can control competition for its books and the price it can charge for them. Starbucks Starbucks is best known as a chain of coffee shops. As such, it has various suppliers and inputs -- it buys coffee beans to make coffee as well as customized mugs and products to sell in its stores. It backward vertically integrated when it bought a coffee farm in China, because normally it would have to buy coffee beans from a coffee bean supplier. Backward Vertical Integration as Strategy for Starbucks Starbucks chose to buy a coffee farm in China, an area that showed tremendous growth in the number of coffee drinkers. At the same time, there was increased competition among companies selling coffee, such as McDonald's and other chains such as Costa Coffee. Adding so many new coffee drinkers to the market creates competition for high-quality beans, with every coffee shop needing to buy them. Competition for high-quality beans means that some competitors will not receive them at all and that those who do will pay a high price driven up by competition. By backward vertically integrating by buying a coffee farm, Starbucks ensures that it will have a bean supply and that it will receive it at a reasonable price.

2. Forward integration
The Apple Store. Buy something there and Apple not only keeps the retail markup in addition to their manufacturing margin, but they control how the place looks, how the staff is trained and managed, what goes on sale, when something gets taken off the shelves, and so on. That is crucial to Apples biggest advantage: marketing. You dont want the guy selling your sexy, hip, hyped product line to look like John Hodgman (PC from the ads, Daily Show Correspondent) in a Geek Squad t-shirt.

Mergers and Acquisitions :A company performs forward integration when it merges with or purchases an organization involved in the distribution of its products. The 2003 purchase of DirectTV by News Corporation is an example of a forward integration through acquisition. DirectTV is a satellite TV company, and its purchase enabled News Corporation to use it as a medium to distribute more of its news, movies and television shows by managing the process itself. Controlling Retail: American Apparel is the classic example of a company that employs forward integration through controlling every aspect of distribution of its products. AA manages every form of distribution in-house, including the high rent, high-profile retail stores, its wholesale operation selling clothing to screen printers and boutiques and the online store that sells throughout the United States and internationally. Warehousing and distribution is also managed internally from the companys Los Angeles factory. Establishing Outlets: Canadian communications giant Rogers is an example of forward integration. The company established Rogers TV, a subsidiary company that operates local television channels. The Rogers TV channels show programs such as cooking and talk shows, which are produced by Rogers-managed television studios. These provide Rogers with an opportunity to advertise and sell its digital products using an electronic version of a retail store.

3. Horizontal integration
Adidas buy shoemaker Reebok for $3.8 billion, giving the company about 20 percent of the U.S. market and the potential to better challenge leader Nike Inc. on its home turf. Under the terms of the deal, Adidas-Salomon AG will pay $59 per share for all of Reebok International Ltd.s outstanding stock, a premium of 34 percent to Tuesdays closing price, said Adidas Chairman and CEO Herbert Hainer. U.S. shares of Reebok rose 30 percent on the news. Adidas shares rose more than 7 percent in Frankfurt trading. Expanded global reach: the combined company would have an expanded global reach, with a sharp push into North America. Chipping away at Nike : Adidas would nearly double its U.S. presence, they said. It currently has $1.9 billion of U.S. sales and Reebok has $1.6 billion of U.S. sales.

Virgin Active (which is majority owned by Branson) has agreed to pay 77.6 million in deal to buy 55 Esporta gyms - a move that will nearly double Virgin Actives size in the UK. The scale of the takeover means that it will need to be cleared by the Competition Commission, but no signs as yet that the competition authorities will block the deal. This is a good takeover for students to look at. Some of them may be familiar with the UK health club market and the Virgin Active brand in particular. A good starting point would be for students to consider the strategic rationale and direction behind the takeover. Hopefully concepts such as economies of scale and market share / market leadership would feature in their discussions. Virgin Active recently passed the milestone of having 1 million members in its club portfolio, although it did

not open any new clubs in 2010, suggesting that it has been able to achieve decent organic growth without expanding the number of locations recently. Virgin Active currently operates a total of 194 clubs, in the UK, South Africa, Italy, Spain and Portugal. The Esporta takeover will double the number of health and racquets clubs that it operates in the UK.

DEFENSIVE STRATEGY 1. Retrenchment

Tesco. Lots in the reports in the media about Tescos decision to put its poorly performing Japanese business up for sale. Why is Tesco taking this move? Simply because it has not been able to establish a sufficient scale and market share to enable it to remain competitive in a country which has been notoriously difficult for foreign retailers to succeed. In the words of Tescos new CEO Philip Clarke: Having made considerable efforts in Japan, we have concluded that we cannot build a sufficiently scalable business Tesco has built a portfolio of 129 stores in Japan - mainly in the Tokyo area and has 4,000 staff. It first entered Japan in 2003 when it made an acquisition of a discount supermarket chain (CTwo Network). The returns on the Japanese investment have not been adequate. Tescos sales in Japan have been weak, with growth well below Tescos outlets in nearby South Korea and Thailand which have performed much better. The FT analysts commented on the decision by noting that the Japanese supermarket industry is fiercely competitive and, overall, unprofitable even for the largest operators. Looks like a smart move by Clarke. A retrenchment in one part of the growing global operation, perhaps to allow greater focus and investment on better opportunities. As the Guardian points out, this is a bold strategic decision by the new CEO. Earlier in 2011, Clarke set the scene for a major shakeup [in Tesco international growth strategy] by promising to improve returns from its overseas investments.

2. Divestiture
divest a part of a firm may be to create stability. Philips, for example, divested its chip division called NXP because the chip market was so volatile and unpredictable that NXP was responsible for the majority of Philips's stock fluctuations while it represented only a very small part of Philips NV. Philips Semiconductors is no longer majority owned by Royal Philips Electronics. Royal Philips Electronics today announced it has completed its sale of an 80.1 percent stake in its semiconductors business to a private equity consortium consisting of Kohlberg Kravis Roberts & Co., Silver Lake Partners, Bain Capital, Apax Partners and AlpInvest Partners NV.

Under the terms of the agreement, which was announced in August, Philips sold the majority stake in its semiconductors business in a more than $10 billion (8.3 billion euros) deal. After taxes, Philips expects to receive approximately $8.2 billion (6.4 billion euros) in cash. The standalone semiconductor business became NXP -- which stands for Next Experience -- at the beginning of September. Frans van Houten, formerly the head of Philips Semiconductors, moved with NXP and is now president and CEO of the new company. With todays transaction complete, van Houten relinquishes his position as member of the board of Royal Philips Electronics Philips will maintain the minority 19.9 percent stake in NXP.

INTENSIVE STRATEGIES
1. Product development
NEW DELHI: Coca-Cola India is forming a new division dedicated to juices as it steps up focus on health beverages to offset a possible slowdown in its core fizzy drinks as urban India begins to ride the health and wellness boom. The new unit will scout for mergers and acquisitions in juices space and explore new business models besides entering the pure juice category, an official close to the development told ET. Although Coca-Cola has two juice drinks Maaza and Minute Maid the world's largest beverage maker does not sell pure juices, a category dominated by Dabur's Real Activ, PepsiCo's Tropicana and recent entrant Parle Agro's Saint. The market for pure juices, which are sold as products that do not contain added sugar, colour or preservatives, is estimated at Rs 250 crore and growing at 20% annually as urban consumers start to prefer healthier drinks over aerated ones.

2. Market development
WALMART entering India: The retail sector had driven a major economic boom in various parts of the world. The impact of the booming retail was most visible in Developed and Developing countries of the world. The Asian regions were also witnessing an economic boost backed by the retail sector. By 2005, retailing was worth US $7 trillion. Walmart was the world's largest retailer when it extricated oil giant Exxon Mobil as the world's largest company by posting US $219 billion in sales for fiscal 2001. Walmart's success had been the result of its ability to leverage size, market clout, and efficiency. Walmart topped Fortune magazine's list of top 500 companies in the world, successively for three years till 2004. In the early 1990s, Walmart announced that it planned to go global. It wanted to look for international markets for many reasons like; the competition from domestic market was becoming

stiff. Al''though Walmart had the scope of expansion in the domestic market, it was becoming difficult to maintain double digit growth as it was suffering from soft sales and rising inventories. During the first five years, Walmart concentrated on Mexico, Canada, Argentina and Brazil which were close to its domestic market geographically. Walmart expanded its international operations through acquisitions, joint ventures, Greenfield operations and wholly owned subsidiaries. The liberalization of the Indian economy in 1991 had opened up the market for consumer goods. Soon, new retailing formats emerged to complement the traditional Kirana (mom and pop) stores. Rising incomes coupled with infrastructure improvements were increasing consumer markets and accelerated consumer tastes and preferences. Economic Researches has highlighted that half of the Indian population as low income group in the year of 1994-95. By 2006 -07 it was estimated that less than 20% of the overall Indian population will be below the low income group Internet revolution has helped the consumers in India to know more about multinational or international products and services. It is estimated that by 2015 more than half of the India population will be between the age group of 20-25. All this estimates makes India as one of the most attractive place to invest in retails sector. After years of controversy and opposition from local retailers and political parties Walmart was successful in opening business in India. Their success is keenly watched and observed by retail giants to make the move in India, which is a highly potential market for retail. The purpose of this study is to understand the barriers of entries that are faced by a multinational giant like Walmart and how this company overcomes such barriers to establish their first wholesale shop in India. The business entry by Walmart will be the first reference for any other multinationals who are trying to penetrate into Indian market.

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3. Diversifiation
Sahara enters retail, to launch 800 'Q' Shops
Sahara India has finally given concrete shape to its retail ambition. It has announced an initial

investment of Rs 3,000 crore to open 800 Sahara 'Q' Shops in 60 cities and towns across five states Bihar, Jharkhand, Rajasthan, Uttar Pradesh and Uttarakhand. The shops will sell food and grocery items.
The food and grocery market in India was around $325 billion in 2011 - 69 per cent of all retail-- and is

expected to grow to $425 billion by 2016 at a compound annual growth rate of 5.5 per cent, according to Technopak Advisors report, Emerging Trends in Indian Retail and Consumer: 2011. In the first phase, the stores will house products under 73 different categories including staple food

items, processed foods, personal care and home care and lifestyle products and home merchandise which will be produced under exclusive tie-ups with manufacturers. The company wants to sell only its own range of products. At a press meet held in Delhi on Monday, Sahara India Chairman and Managing Worker Subrata Roysaid the company plans to scale up operations to 998 cities and towns by March 2013. Besides providing employment to some 143,000 people, Sahara will rely on its existing network of salespeople - currently engaged in other endeavours of the company - to generate demand and bring in customers. Sahara's various financial services have a depositor base of 65 million people across the country which it will initially tap. It expects to generate revenues of around Rs 15,000 crore in the next 12 to 18 months.

4. Market penetration through R&D

Products for India The Nokia story in India has not been about grafting a model that has worked abroad. In fact some of its models -- the handsets, not the strategies -- are unique to India. Consider this example: It would probably be inconceivable to mobile phone users in the U.S. or Europe that their mobile phones should incorporate a flashlight, or torch. But in India -- where large numbers of the rural population do not have electricity, and power cuts are commonplace even in the cities -- having a torch built into a mobile phone is a distinct and tangible benefit. The Nokia 1100, the first madefor-India phone, has been a runaway success. Manufactured at Chennai, it is also being exported. The 1100 incorporates a torch, an alarm clock and a radio. "Innovation is something which consumers reward in this market," says Shivakumar. Similar plans are in the works at Nokia's three India R&D labs, which employ 700 people. For obvious reasons, most of the activity is under wraps. Nokia is, however, willing to talk about the "shared" phone. This is, again, something that mobile phone users in affluent countries might find puzzling, but the concept is simple. For reasons of affordability, in rural areas a phone may be shared by several people. The models being launched to cater to this need will have separate address books, individual billings and more. Will it work? People initially doubted the torch phone, too, but it became a popular product. "Second, it is a safety product for women in small towns, because with a cell phone you are in touch all the time; you're accessible. Next, it is a huge productivity vehicle. When somebody calls you, you do not need to take your bike out; you don't need to take your car out. You make a phone call and it's over. "It is also a driver of a lot of economic activity. If you go down the roads of Gurgaon and Delhi, you will find that lots of people have written their [mobile] phone numbers on the walls -- a plumber, an artisan, a carpenter, a tailor. I think the whole service sector has gotten a huge lift, thanks to this. This has killed the visiting card business. It is also the ultimate entertainment device. You have music on it now, in terms of radio and stored music. The day is not far when you will see movie clips and TV. One of our products has that, so that's TV on the go."