...to go on the offense or defense. Some offense actions may already be employed with the general strategy of competing with other businesses. These include such things as focusing on building competitive edge, appropriating assets where competitors are found to be weak and protect their investments, or using a surprise tactic. Occasionally the firm’s best option is to be the first to use the strategy, and commence an offensive to advance and increase it’s market share. If a company decides to undertake a defensive position, then multiple strategies must be observed to have a successful conclusion. There are many purposes for a firm to take a defensive approach, these include: 1. Lower the firm’s risk of being attacked 2. Weaken the impact of an attack that does occur 3. Influence challengers to aim...
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...1.0 Introduction The competition in Airline industry is now rising which make it harder and harder for those Airline corporation to survive. Scandinavian Airlines System (SAS) is an airline business which was founded in early 1946. SAS has made a huge successful change to overcome its problems through recession period. This successful change has a big contribution of Jan Carlzon who is a CEO of SAS. Nowadays, after a vertical integration revaluation, SAS has expanded their business into International Hotel (SIH) and Service Partner (SSP) such as catering and restaurants. The main aim of this report is to analyze the problems that SAS faced as well as identify the solution approaches that had been used by the company, especially the vertical integration. In order to analyze those problems, the report will apply SWOT analysis, PESTEL analysis and Five Porter Factors analysis. 2.0 Analysis 2.1 Analysis SWOT is stand for Strength, Weakness, Opportunities and Threats. According to Robert (2004), SWOT analysis aims to identify as well as analyze internal strengths and weaknesses of a company. It also analyzes opportunities and threats that the environment has on a corporation. SWOT analysis can help companies to enhance their strengths and opportunities as well as minimize their weaknesses. Due to Nadine and Anne (2007), SWOT is a useful tool for decision making. In addition, by applying SWOT, company is able to avoid the unworkable constellations of threat and weakness...
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...STUDIES The Effects of Vertical Integration on Oil Company Performance Fernando Barrera-Rey Oxford Institute for Energy Studies WPM 21 October 1995 The contents of this paper are the author's sole responsibility. They do not necessarily represent the views of the Oxford Institute for Energy Studies or any of its Members. Copyright 0 1995 Oxford Institute for Energy Studies All rights reserved. No palt of this publication may be reproduced, stored in a retrieval system, or transmitted in any fomi or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior pemiission of the Oxford Institute for Energy Studies. This publication is sold subject to the condition that it shall not, by way of trade or otherwise. be lent, resold, hired out, or otherwise circulated without the publisher's prior consent in any fonii of binding or cover other than that in which it is published and without D similar condition including this condition being imposed on the subsequent purchaser. ISBN 0 948061 90 1 ABSTRACT When asked to rank industries by their degree of vertical integration, most people would agree that the oil industry should come top of the list. Underlying this belief is the fact that integration and size tend to be closely associated. As the oil industry is so large and oil companies so visible and perceived as so profitable, the common belief is a correlation between vertical integration, size and performance. If...
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...This specifies how much material needs to be extracted to ensure a fair balance across the country. Before extraction can begin, CEMEX must obtain permission from local authorities. Its plans must include sensitive ways of working, restoration and after-care of sites. This ensures the quality of the environment is maintained and improved once extraction is complete. CEMEX’s marine aggregates business involves extracting sand and gravel from the sea bed by dredging. Dredged aggregates are vital for the future development and maintenance of our hospitals, schools, housing and transport infrastructure. They also help to replenish Britain’s beaches and protect the coastline from erosion. The UK government regulates marine dredging to minimise impact on the environment. Secondary activities As part of its secondary activities, CEMEX has three plants making cement. Heating clay and chalk fuses the raw materials together. The resulting materials are ground to powder as cement....
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...a critical analysis of the contribution of the existing body of empirical literature is conducted. In recent years, researchers have continued to develop and extend TCE. Williamson (1991b) introduces the shift parameter framework which investigates how the optimal choice of governance changes in response to dynamics in the institutional environment. Nickerson (1997) develops the positioning-economizing perspective arguing that decisions regarding market position, resource investments, and governance mode are interdependent and determined simultaneously. A number of authors came up with an increasing interest in relational institutional arrangements arguing that TCE may overstate the desirability of complex long-term contracts and vertical integration in exchange settings where a substantial hold-up potential is present. JEL Codes: Keywords: D23, L22 Transaction cost economics, discriminative alignment, theories of the firm, shift parameter framework, positioning-economizing perspective, structural form model, empirical literature Dresden University of Technology, Department of Business and Economics, Chair of Energy Economics and Public Sector Management, D-01062 Dresden. The usual disclaimer applies. Corresponding author: contact@sophia-ruester.de, URL: http://www.sophia-ruester.de. 1 1 Electronic copy available at:...
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...articles and academic journals approached various reasons and conclusions regarding whether vertical integration results in the most profitable application of a merger structure versus considering a horizontal or diversified integration approach. Hence, the topic surfaced during Satterlee’s (2018) comments relating to multinational corporations (MNC) and the three extensive types of MNCs concerning production, operations management, and functionality as the operational focus. Therefore, further research may reveal if one type of integration is more applicable when one considers a production merger or an operations style merger among the corporations considering these financial endeavors and...
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...Vertical Merger Vertical mergers are a method companies use to purchase supply businesses or customers using a method called “forward integration” and supply companies using a method called “backward integration”. “Vertical integration by merger does not reduce the total number of economic entities operating at one level of the market, but it might change patterns of industry behavior. Whether a forward or backward integration, the newly acquired firm may decide to deal only with the acquiring firm, thereby altering competition among the acquiring firm's suppliers, customers, or competitors,” (Gabriele, pg. 2, 2003.) It is argued by many economists that conglomerate mergers are really vertical mergers in disguise and use this type of merger to gain more financial control and gain eventually going from small companies to corporations. “Many mergers that on the surface appear to be conglomerate also have a vertical ‘flavor’ because they often involve the acquisition of the target’s distribution network. An interesting question is whether conglomerate mergers with a vertical dimension can be a profitable strategy to deter new entrants..,” (Gabriele, pg. 3, 2003.)Vertical mergers are a great way for companies to control the internal financial aspects of the business between suppliers and customers and additionally helps managers monitor and improve employee and store performance. References: Cooper, J. Froebel, L., O'Brien, D., & Vita, M. (2005). A Critique of Professor...
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...ZARA IT FASHION Zara follows a very simple business idea of linking Customer Demand-Manufacturing-Distribution, making them the best vertical integrated company with super responsive network. It just outsources simple activities, which doesn’t affect their corporate strategy or supply chain and gives a strategic advantage. Zara owns its upstream suppliers and downstream buyers, which has a significant impact on SBU’s (Sequential Business Units). It supports vertical integration, which aligns with their supply chain strategy. It just outsources products, which are simple, has less turn around and doesn’t impact their supply chain. Because of their super responsive communication and network they have been extremely successful. The corporate strategy very closely aligns to vertical scope of the firm. Due to its vertical integration, it has complete control over cost and assets. The governance structure they follow is closed communication, rapid timing and synchronicity and leveraging their investment in production and distribution facilities, which is continuum too. Selling a finished product within 15 days in fashion industry is unbelievable and they clearly outnumber their competitors and rivals. Since, it has its centralized design and production center attached to the HQ, the flow of information is rapid and direct; making their supply chain more responsive. Also, their Organizational structure is designed in a way that the operational procedures, performance measure and...
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...Vertical Integration of Samsung Vertical Integration is a method of management control that is used by many companies. It is the process in which a single company controls or owns the distributors and the suppliers in the production of a product or service. This vertical integration is an important corporate strategy as it creates significant impact for the company in the regions of costs, differentiations, and other strategic issues. Vertical integration if applied right, can help company to reduce costs and improve efficiency by reducing transportation expenses and reducing turnaround time. Vertical integration is divided to backward integration and forward integration. Backward integration is when a company buys its suppliers, or set up its own facilities to manufacture supplies. Usually when a company buys a supplier, it is because of the products that are produced by supplier is performing very well and in great quality therefore create a good feedback from customers. It also reduces transportation costs, improve profit margin and make the company more competitive. Forward integration is where activities are expanded to include control of the direct distribution of its products. A company buys its own retail shops to distribute the products directly. With this way, the company can market its products directly to the hand of costumers rather than having to engage with other retailers. This can help company to achieve higher market share, better access to customers...
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...that the performance of individual firms is determined wholly by the conduct of participants in that industry (including themselves), and that conduct is largely (but not completely) determined by industry structure, conduct and performance over time. Feedback loops signify the impact that performance will ultimately have on conduct ad structure (and thus in turn on performance again), and the impact that industry conduct has on structure. It also hypothesizes that external shocks, such as changes in technology or government regulation, alter industry structure, and in turn conduct and performance, over time. SCP Model Industry External shocks Producers S tructure C onduct P erformance Feedback Industry structure is determined by the economics of demand and supply in the industry, as well as by “ industry chain economics” which represents the , inherent bargaining of customers, producers, and suppliers in the industry, and the sources of this power (e.g., vertical or information market failures). Conduct is characterized by strategic decision competitors in the industry make given industry structure and performance. Examples include marketing, capacity, vertical integration, operations, and management control decisions. Performance may be measured on numerous axes, including financial performance, technological progress, and job creation. There are three main drivers of external shocks to the industry: technology breakthroughs, changes in government...
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...group finds attractive). | 8 | Advertising | The activity of attracting public attention to a product or business by paid announcements in print, | 9 | Below the Line | A term applied to marketing that carries a response mechanism. This includes coupons, DRTV and telemarketing (verbal responses). | 10 | Cold Call | The process of contacting a person (known as a prospect) that has no prior relationship with you, e.g. a telemarketing company calling from a previously uncontacted database. | 11 | Cross-selling | Using a customer´s buying history to select them for related offers, e.g. a car alarm for new car buyers. | 12 | Follow-up Call | A telephone call made after the initial mailer has been sent with the objective of increasing impact and the response rate. | 13 |...
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...firms in a horizontally integrated (or focused) sector against those in more diversified businesses which are vertically integrated or conglomerates. In this report, I will be analysing and comparing how these integrations are being effectively deployed by various organisations in order to have the edge above their competitors in the sector. The second part of this report will focus on the clear definition of the types of business integration discussed as well as giving examples of each type. With the aim of using numerous examples and case studies, to show how these organisations are using the integration to gain more control and less competition in their sector. Horizontal Integration Horizontal Integration, according to Investopedia, this is defined as “When a company expands its business into different products that are similar to current lines”. However there are so many definitions to define horizontal integration but one thing all the definitions have in common is the coming together of two or more companies with the aim of becoming the dominant force in the sector and also generating more profit with less input compared to when these companies operate separately, but this is be done under single ownership and control. Another definition of horizontal integration is “the merger of companies at the same stage of production in the same or different sectors”. (Business Dictionary). If the end products of the merging companies are similar in a way, this can be referred...
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...dominated the frozen food market in the 1950's and 1960's. They accounted for over 60% of frozen food sales in the UK. They served exclusively to over 40,000 retail outlets and among other outlets served; they accounted for over 75% of their frozen food sales. Problem Summary Birds Eye was losing its market share and profitability during the 1970's and 1980's due to increased competition in the frozen foods market. In 1978 their market share of 60% declined to 29%. Private label competitors had gained over 21% of the frozen food market. The increase of stiff competition drove prices down and lowered profitability for Birds Eye. A huge factor in loss of profitability and market stronghold was their internal strategy. The company’s vertical integration strategy worked for in the beginning to initially strengthen their brand, but lost its performance during the 1970's and 1980's. Due to the rising costs of producing frozen foods in the 1970's, and increasing market competition, the company needed to shift to a more horizontal strategic approach. Analysis Value Chain Birds Eye value chain was the chain of activates that it was operated on. The chain of activities gave them more value to its service and its products until early late 1960’s. The primary activities for Birds Eye were inbound logistics, operations, outbound logistics, marketing...
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...Table of Contents 1. Introduction 2. Typology of mergers兼并 3. Reasons to acquire收购companies 4. Integration process 5. Quantifying定量the value of an acquisition收购 Typology of mergers & acquisitions Different forms of acquisitions: One possibility is literally字面意思to merge the two companies, in which case one company automatically自动assumes all the assets and all the liabilities of the other Such a merger must receive the approval许可of at least 50% of the shareholders of each firm An alternative选择性is simply to buy the seller's stocks in exchange for cash, shares or other securities 证劵 In which case the acquirer收购方will deal individually单独with the shareholders of the selling company A third approach is to buy some or all of the seller's assets In this case, ownership of the assets need to be transferred and payment is made to the selling firm rather than directly to its shareholders Merger accounting If company A buys company B at a market value which is superior to its book value, company A paid a premium Company A will show in its consolidated accounts an amount of goodwill equivalent to the premium paid Typology of mergers & acquisitions Merger Accounting The premium can be justified by a licence not valued in company B balance sheet or a promising product or technology Company A will be obliged each year to estimate the fair value of the goodwill and if it falls below the premium, the amount on the balance sheet must be adjusted downward...
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...3. Which type of vertical marketing system does Zara employ? List all the benefits that Zara receives by having adopted this system. Zara employs a Corporate Vertical Marketing System. Zara has managed to build a system that is controlled from a single place and that it allows it for quick response, decision and problem solving. Because Zara’s parent company Inditex owns most of the resources needed for the process of clothing design, production and distribution it is able to “control most every aspect of the supply chain, from design and production to its own worldwide distribution network” (Armstrong & Kotler). Vertical Marketing System Introduction In an organization, effective marketing strategies play an important role in boosting the performance of the business. In the integration of the corporate leaders in pursuit of their financial objectives, the creation of marketing system has been established. The creation of vertical marketing system is introduced and defined as a distributing channel in which the manufacturer, wholesaler, and retailer act as a single system. An organization that can control the product and services until it reached to the end consumers is the plain example of vertical marketing system. Apparently only few of the businesses around the world successfully managed this type of system. It may define as a difficult approach to maintain the sales and effectiveness but it serves as the strongest point of the organization to boost the various...
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