BUSN620 Week 5 forum replies

BUSN620 Week 5 forum replies :PART 2 Replies: identify each separately by name in ( ), consisting of 3 separate minimum 100-word replies. Please refer to BUSN620 Week 5 Forum for the weeks readings, learning objectives, and general reference notes in order to reply.

BUSN620 Week 5 forum replies

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PART 2

Replies: identify each separately by name in ( ), consisting of 3 separate minimum 100-word replies.

 

Please refer to BUSN620 Week 5 Forum for the weeks readings, learning objectives, and general reference notes in order to reply.

 

(1kevwu)

Respond with minimum 100 words, to include 1 direct question.

In this week’s discussion, we take a look at the different opportunities that companies can have from implementing diversification or vertical integration into their business strategies. In examining diversification, we can take a look at companies utilizing corporate-level strategies diversification strategies, and vertical integration strategies. Three types of opportunities that are apparent in companies that implement these strategies include having a diverse enterprise to expand the exposure of products and services, making it more difficult for other companies to penetrate into the market, and also gaining competitive advantages over other companies in the competitive markets.

In the major entertainment enterprise that started with animation and the iconic Micky Mouse, Disney has transformed into a global enterprise that has utilized diversification strategies in its acquisitions of other major companies. These acquisitions of companies such as Pixar and Marvel have allowed them to create synergy in their product lines, especially in introducing these characters and concepts into their successful theme parks both domestic and foreign. What Disney utilized was corporate strategy, where “actions taken by the firm to gain a competitive advantage by selecting and managing a group of different businesses in several industries and/or product markets” (Kennedy et al 2020).

Amazon has also operated in a diversification strategy and its website went from originally selling books to everyday household items and also groceries. To avoid being in one industry, companies can utilize different diversification strategies in avoiding the risk of being too one-dimensional or limiting their product and services. By implementing unrelated diversification, Amazon has transformed its company into a global enterprise that boasts of convenience and has become a staple and necessary lifestyle choice by many consumers.

A company that utilizes vertical integration can help limit the amount of power that another firm has over the company. Apple has been able to take advantage of completely eliminating the power of distribution companies by opening their own retail stores such as Apple stores. Tesla has also adopted a similar strategy in the adoption of its Tesla stores and online market, which has taken the distribution channel completely under its control. These companies have eliminated the need for these intermediate subsidiaries, which proves to be more profitable for the company in the markets.

 

Reference

 

Kennedy, R., Jamison, E., Simpson, J., Kumar, P., Kemp, A., Awate, K., Manning, K. (2020).

Strategic Management. https://open.umn.edu/opentextbooks/textbooks/mastering-strategic-management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2ereid)

Respond with minimum 100 words, to include 1 direct question.

I hope I am understanding this question correctly.  As a business owner it is important to find new ways in order to remain relevant within your market space.  The number one priority is to continue to make profits in order to stay afloat.  Diversification is a way for these companies to expand their reach by either creating new products, acquiring other companies in a different market space, or geographically expanding reach to other areas of the world. Vertical integration is when a company enters into a different aspect of the value chain.  For instance, a company that is the supplier can then enter into the buyer realm and have more control over that specific market space.  This in turn will drastically increase profits. A related diversification occurs when a business moves into a new industry with similar infrastructure or items being sold.  A good example of this is Apple.  Apple first began with just making computers until Microsoft entered into the same market space and became a dominating competitor in the computer market.  To help diversify, Apple began making Ipods, Iphones, and Ipads which diversified their portfolio and allowing them to continue their overall dominance. An unrelated diversification occurs when a business tries to move into a different industry they are unfamiliar with.  A good example of this is Starbucks attempting to expand its reach outside the coffee industry and try to sell furniture.  As I am sure most of this class has never heard of this (as I did not either prior to our reading) this did not sell well and did not last long.  Last, is geographic diversification.  This occurs when business decides to expand its reach to other areas of the world.  A good example would be all the fast food restaurants who are in multiple countries who adapts their menus for that geographic location.

 

Moorehouse, G. (2021, August 9). Business Diversification Strategy – The Best Examples. Retrieved from Shorts: https://blog.shorts.uk.com/business-diversification-strategy-examples

Reed, K. B. (2020). Strategic Management. Virginia Tech: Virginia Tech Publishing.

 

(3egarc)

Respond with minimum 100 words, to include 1 direct question.

For this week’s readings, it is clear to say that there are many ways to manage a company’s growth as well as manage how to keep it in a healthy or profitable state. Vertical integration is a decision-making process that involves moving forward or backward into the value chain. Forward vertical integration can be useful for neutralizing the power of buyers and allowing companies who are providing more profit that can be invested elsewhere. However, backward vertical integration is useful when a buyer has too much power of their firm. Another opportunity is Horizontal integration: mergers and acquisitions. According to Reed, (2020), horizontal integration refers to pursuing a diversification strategy by acquiring or merging with a rival.

An example of vertical integration is from Apple, Inc. Apple was under a contract with a dialog battery supplier however, Apple wanted to do chips in-house. By doing so, left room for the company to provide the supply as well as use different stages of the value chain. With apple controlling the component products (battery chips) and the final revenue, enabled the Apple Incorporation to generate more efficient power-management chips to improve products such as Air Pods and Apple Watch (Benchmark International, 2018).

Another example is T-Mobile merging into Sprint. To prevent T-Mobile from closing out or losing a lot of money, they decided to join a rivalry and keep the business going. Merging into another company helps create diversification, uniqueness, and a bundle deal. Lastly, there is backwards integration. A great example of Krispy creme because they make their own dough and have there out factory that lowers the cost yet lets them oversee the firm. For a company to create its own supply gives it a competitive edge to be owned by itself and not depend on a supplier.

Reed, K., (2020). Strategic Management. Virginia Tech Publishing. https://vtechworks.lib.vt.edu/bitstream/handle/10919/99282/Strategic-Management.pdf?sequence=22&isAllowed=y

Benchmarck, International, (2018). The benefits of Vertical Integration as Evidenced by Apple’s intent to purchase assests from Dialog. https://blog.benchmarkcorporate.com/the-benefits-of-vertical-integration

 

W5: Innovation Strategies, Selecting Corporate-Level Strategies & Competing in International Markets

Question posed: What are three types of opportunities for sharing a sound basis for diversification or vertical integration? Give an example of each from companies you have read and or researched.

Week 5: Innovation Strategies, Selecting Corporate-Level Strategies & Competing in International Markets

Overview:

Welcome to Week 5.

Course Objective(s)

CO2: Evaluate strategic initiatives to leverage opportunities and mitigate threats to businesses.

Weekly Objective(s)

LO1: Identify and discuss topics for long-term corporate objectives including the forces that drive the organization’s products and markets. LO2: Identify the various ways companies diversify.
LO3: Explain the strategies for competing in International Markets.
LO4: Illustrate how companies strengthen their competitive position in the market place.

Topic(s) of Discussion

Entrepreneurial Orientation, Proactiveness, Risk Taking, Blue Ocean Strategy, First Mover, Incremental Innovation, Disruptive Innovation, Architectural Innovation, Radical Innovation, Product Life Cycle, Firm Strategy, Joint Ventures, Mergers and Acquisitions, Strategic Alliances, Innovation, Vertical Integration, Horizontal Integration, Unrelated Diversification, Diversification, Corporate-Level Strategy, Internal Development, Co-location, Co-opetition. Corporate Strategy, Synergy, Related Diversification, Geographic Diversification, Backward Vertical Integration, Forward Vertical Integration, Retrenchment, Restructuring, Boston Consulting Group Matrix (BCG), CAGE Framework, International Strategies, International Markets, Political Risk, Economic Risk, Cultural Risk, Multinational Corporation (MNC), Exporting, Licensing, Franchising.

Discussion Question

Question posed: What are three types of opportunities for sharing a sound basis for diversification or vertical integration? Give an example of each from companies you have read and or researched.

Learning Material

The Learning Material section contains the weekly lesson along with readings, videos, and other material that conveys this week’s topics.

Week 5

READ Chapters 7, 8 and 9

Introduction

Topics to be covered include:

  1. Mergers & Acquisitions (M&A’s)
  2. Vertical Integration
  3. Diversification
  4. Joint Ventures
  5. Competing Globally

As we jump into chapters 7, 8, & 9, we will cover specific actions that must occur in order to complement the firm’s competitive approach to include framing of its business strategy. Gamble, Thompson, and Peteraf (2016), state that managers must carefully evaluate and select from several measures that can enhance a company’s strategy.

Every organization, in a competitive market is subject to offensive challenges created by their rivals. Organizations must employ defensive challenges to counter such offense. Some defensive, counter punches include lowering the risk of being attacked, weakening the impact of attacks and influencing challenges to aim their attacks at other rivals.

As the saying goes, timing is everything. “When” to make a strategic move is often the most important key to success. Being the first-mover helps an organizations reputation and image with buyers. An example, Apple, and the introduction of the first iPod in 2001.In addition, Kindle, produced the first eReader in 2007.

Integrating forward, in an effort to enhance the organizations competitiveness, allows an organization to gain better access to end-users and better market visibility.

Mergers and acquisitions (M&A’s) are often used in strategic planning. M&A’s are especially appropriate for situations where alliances and partnerships do not go far enough in providing a company with access to the needed resources and capabilities.

Using Diversification in Strategic Positioning

Some businesses find that the best way to achieve a competitive advantage in the marketplace is through diversification, which refers to the process of producing and selling a variety of goods and services in the marketplace. Organizations can practice diversification in the following ways (Dess, Lumpkin and Taylor 2005, 192-193).

  • Related diversification – Refers to the process of achieving diversification by expanding to offer goods and services that are similar to those already being offered by an organization.
    With related diversification, an organization generally benefits from horizontal relationships, which means the organization’s different product lines share core competencies and tangible resources such as production and distribution facilities.
  • Unrelated diversification – Refers to the process of achieving diversification by expanding to offer goods and services that are dissimilar to those already being offered by an organization.
  • With unrelated diversification, an organization generally benefits from hierarchical relationships, which means they create value by sharing support activities in the corporate office, such as human resource management and information systems.

The following strategies are used to achieve these types of diversification:

RELATED DIVERSIFICATIONUNRELATED DIVERSIFICATION

If an organization strives to achieve related diversification, it typically uses one of the following strategies (Dess, Lumpkin, and Taylor 2005, 193-201):

  • Leveraging core competencies – An organization’s core competencies include its collective knowledge and expertise among the organization’s members and its technological capabilities. It may be possible to utilize these core competencies in the development and maintenance of multiple product lines. This strategy for related diversification relies on economies of scope to make diversification feasible.
  • Sharing activities – Organizations may have physical resources, such as manufacturing facilities and sales personnel, which can be used to develop and maintain multiple product lines. This strategy for related diversification relies on economies of scope to make diversification feasible.
  • Pooled negotiating power – Refers to an organization’s to dominate the market and have the power to obtain and sustain a market position. When organizations have market power, they may be able to use this power to support diversification efforts.
  • Vertical integration – Refers to the process of an organization expanding its operations “by integrating preceding or successive productive processes. That is, the firm incorporates more processes toward the original source of raw materials (backward integration) or toward the ultimate consumer (forward integration)” (Dess, Lumpkin and

 

Competing Globally

Technology, particularly the development of the Internet, has made it easier for organizations to compete globally. Globalization refers to the process of organizations expanding their operations beyond their country’s borders to compete in markets around the globe. Globalization has led to an increase in international trade and cultural exchange among the world’s citizens.

Advantages of Globalization

To decide whether to compete globally, organizations should consider the advantages and disadvantages of globalization. Dess, Lumpkin and Taylor (2005) identified several advantages and opportunities made possible by globalization. These can be summarized as follows.

  • Increases opportunities for economies of scale and the reduction of costs.
    Offers opportunities to increase the number of customers, and the size of potential markets, served by an organization.
  • Increases the scale of operations, giving an organization a larger base for revenues and assets.
  • Provides the opportunity to spread fixed costs, such as research and design, over a larger base of production.
  • Provides new markets for goods and services that may be losing their appeal in existing markets.
  • Provides the opportunity to optimize the physical location that is used for each activity in an organization’s value chain.
  • Provides the opportunity to improve an organization’s operations by giving it access to new resources, such as employees with special expertise.
  • Provides the opportunity to spread risks across a larger base of operations.

 

Risks of Globalization

Dess, Lumpkin and Taylor (2005) also identified several types of risks that organizations may face if they choose to compete globally. These can be categorized as follows:

  • Political risks – Some countries experience problems such as terrorism, social uprisings, and military instability which can make it challenging, and even dangerous, to operate an organization in the country.
  • Economic risks – Different countries have different legal requirements for how organizations operate within their borders. This is particularly an issue in areas such as intellectual property rights.
  • Currency risks – Exchange rates of currencies among different countries can fluctuate, causing significant changes in the costs of production and the profits earned. Organizations must continuously monitor these exchange rates and be prepared to deal with changes that have a negative impact on their operations.
  • Management risks – When operating in other countries, organizations will find differences in languages, cultures, customs, and so forth. They also will find that their typical customers may vary from country to country in terms of preferences, as well as their social status and income levels. For each country where their organization operates, managers will be challenged to learn the nuances and adapt their organization’s products and approach to customer service to meet the needs of each country.

Strategic Plan for Globalization

To successfully compete globally, organizations need to have a strategic plan that outlines how globalization will be approached. Dess, Lumpkin and Taylor (2005, 240-245) outline several strategies as options for competing in world markets. The following information provides a brief summary of each strategy.

  • International strategy – Based on diffusing and adapting a parent company’s expertise and capabilities to international markets. The core competencies are centralized in the parent company’s home office, and little adaptation occurs in foreign markets. Goods and services are designed, and possibly even produced, in the home office to be sold in markets around the world.
  • Global strategy – Emphasizes economies of scale, which are achieved by standardizing goods and services and centralizing operations in a limited number of locations around the world. The home office retains authority and focuses on coordinating and integrating operations in the organization’s different locations to standardize goods and services, with limited adaptation to local markets.
  • Multidomesticstrategy  – Focuses on differentiating goods and services to meet the needs of local markets. Operations are decentralized, and goods and services are adapted to fit local markets.
  • Transnational strategy – Each function in an organization is analyzed and it is centralized or decentralized according to which approach would yield the most benefits to the organization. Each operation, such as research and development, is located in the office(s) where it will achieve optimal results.

Conclusion

Some organizations will find it advantageous to compete globally. This is a viable option that has benefited many organizations. If an organization decides to practice globalization, its strategic plan should include a strategy for how globalization will be approached. To determine this strategy, strategic managers should ensure they understand the advantages, as well as the risks, of competing globally.

References

Gamble, J., Thompson, A. A., & Peteraf, M. A. (2016). Essentials of strategic management: The quest for competitive advantage (5th ed.). McGraw Hill.

Activities & Assessment

The Activities & Assessment section includes the activities and assessments for the week that provide you an opportunity to practice the material and then demonstrate what you’ve learned.