Corporate Strategies

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

Diversification takes place when

Firms want to invest in distinct business When a company wants to leverage on competencies Sharing resources Managing rivalry multipoint competition

Types of diversification
1) Related Diversification two types a) Market Related D b) Technology related D 2) Unrelated Diversification

Reasons for related Diversification

Financial synergies in terms of cost reductions Marketing synergies Operational synergies HR synergies

Reasons for related Diversification

Maximising returns by investing in profit sector Leveraging opportunities especially emerging Stability in earnings HR synergies

Risks of Diversification
Unrelated diversification may lead to unsuccessful ventures Dissimilar skill sets a risk High costs of diversification

Expansion through Cooperation

Coexist with cooperation Rival firms get together for mutual benefit Through.. Mergers and Acquisitions Joint Ventures Strategic Alliances

Mergers and Acquisitions

Merger is a combination Acquisition is a takeover

Types of Mergers
Horizontal M Vertical M Concentric Conglomerate(collection)

Reasons for Mergers

To reduce competition Take advantage of synergies To increase growth rate To diversify To improve stability and earnings To avail tax concessions