...results. Strategy formation is the process by which an organization develops and implements a strategy. All steps of the process should be followed in order because they build upon each other. The other steps of the process include value assessment, vision and mission formulation, strategy design, performance audit analysis, action plan development, contingency planning and implementation. 5.1 Integration Strategies In the competitive world of business, companies generally do whatever it takes to secure their stature in the marketplace. One of the most effective means to this end involves what is referred to as vertical integration, which takes on two forms: forward and backward integration. Forward integration focuses on the manner in which a company oversees its product distribution. On the other hand, the backward form concentrates on how a company regulates its goods or supplies. 5.1.1 Forward integration Forward integration is a type of vertical integration which a supplier acquires a manufacturer or a manufacturer acquires a distributor. Businesses engage in forward integration either to generate a higher margin from a key input which it owns or produces or to better market its products and increase its profitability. Dr. Gerhard Bester, an Agricultural Research and Development Director, our aim is to ensure PepsiCo has continued access to the key agricultural raw materials necessary to supply growing consumer needs, while respecting the environment and communities...
Words: 1605 - Pages: 7
...prepared for the unexpected. As the old saying goes, “It’s better to be safe than sorry.” Another thing to consider is ordering in bulk. Ordering in bulk is great for items that doesn’t spoil quickly or doesn’t change very often. Also the unit price for the item decreases due to the high quantity of items ordered. Without having a good knowledge of the operations, a business would be hard to function or possibly inoperable. Special decisions are something to be considered from the start of opening to 5 years into the business. Whether you decide to purchase insurance allows to company to be ready for crisis. If an accident happens, insurance will help you pay for most of the damages instead you paying directly out the business account. Vertical integration and diversification is another decision to contemplate on. It may be cheaper to make complimentary items at your own workplace rather than outsourcing to another vendor. Also keeping up with the latest trends of the consumer world. If a business doesn’t offer what is popular with the market, a business may not last to long. Giving a survey to customers allows the business to understand what the customer wants. Many customers can give their opinion on how they would liked to be served, then a business can decide on how they can complete their request. If your business becomes a huge success, a decision on expanding the business may be considered to meet the demand. Special decisions always come up in the business world, whether they...
Words: 312 - Pages: 2
...ECCO Case Study - Question 1 ECCO has a fully integrated vertical value chain. What are the pros and cons of that strategy? What economic and strategic factors should be analyzed to answer this question? The pros of a having a fully integrated vertical supply chain for Ecco include the following: * Improved supply chain coordination between tanning, manufacturing and distribution. This would ultimately help maintain quality and improve operational efficiencies such as logistics. * There is also an increase in the areas possible for differentiation, as Ecco can control more inputs. An example might be in the tanning process, in which their competitors may have less control over. * Ecco can also create greater barriers of entry for competitors. By differentiating competition out of the market such as marketing their strict in house controls of the tanning process. * Ecco can also access downstream distribution channels that may otherwise have been inaccessible if they were to just sub out distribution and be at mercy to what the market can provide. * Opportunities for control over investment or innovation both upstream or downstream which may otherwise not be possible will be advantageous for Ecco. * Facilities in different countries can take advantage of local resources and expertise in different areas like the leather research center in Denmark. * Overseeing operations throughout the whole value chain. * Better control and...
Words: 1264 - Pages: 6
...treated with strict confidence. 1. The government of Kenya introduced the e-government program in June 2004, what would you describe as some of the key achievements over this past 10 years? 2. Based on your experience, would you say the government has done enough to leverage on ICT to improve service delivery? Explain 3. Implementation of e-government is thought to go through the following 4 stages: I) Catalogue stage (Online presence with a website, basic information and downloadable forms) II) Transaction stage (the public can make requests, process applications, make returns etc and get feedback from the government online) III) Vertical integration stage (services provision at different functional levels are linked through a shared database) IV) Horizontal integration (One –Stop –Shop, service delivery arms of government are connected to a shared database through computer interphases). From these four stages, where will you place our current e-government platform? Explain why 4. a) What would you say have been the main challenges in implementing the e-government program over the past 10 years? b) Any proposals on how these challenges could be overcome as we move forward? 5. In your opinion, do we have enough technical skills among the public servants to drive the next phase of the e-government? If not, what measures can the government take to build this right capacity? 6. The e-government is meant...
Words: 406 - Pages: 2
...In reviewing the facts presented to me it is my opinion, along with those of my colleagues at WIF Consulting, that your recommendation to horizontally expand the production of market pulp is the better decision when weighing it against the prospect of forward integrating into paper production. After doing an initial calculation, the net present value of the Valdivia project is roughly $3.7 billion (see Exhibit A), which yields a gain of almost $2.6 billion. Below are the key points we’ve identified to support this figure. Existing Competencies Within Arauco’s Contracted Workforce Because Arauco already has over 10,000 employees aiding in forestry and transportation operations under roughly 300 subcontracts, along with a workforce of independent workers operating all of Arauco’s sawmills, it becomes clear that several relationships are already being managed in order to ensure efficiency and effectiveness. By adding another workforce entirely dedicated to the production of paper, Arauco is taking on even more workers that are performing a series of operations that Arauco is not familiar with. Because of this, enforcement costs will be incurred to simply oversee the workforce’s numbers. Additionally, upper management will either need to be trained in a whole new set of competencies, or new employees must be taken on to optimize production performance. Additionally, to take full advantage of the potential sharing activities, will require an unknown amount of resources to...
Words: 1032 - Pages: 5
...Global and Domestic Issues in the Food Supply Chain (Source: Roger W. Hutt, Arizona State University) High-value and processed foods, accounting for three-fourths of total world food sales have increased in response to consumers diversifying their diets or demanding higher-quality and labor-saving food products (Regmi and Gehlhar, 2005). More and more, consumers are asking for convenience, and the food system is responding. The relatively higher cost of a ready-to-serve bag of salad is preferable to a head of lettuce that must be trimmed and prepared. Demand for foreign brands and consumer-ready products, in particular, are expanding as well. Food producers and marketers are responding to the demands of the marketplace. Producers are investing in processing facilities in many host companies. Adjusting to meet the needs of consumers, retailers are importing high-value foods from around the world and selling it from a variety of retail store formats, with supermarkets and hypermarkets accounting for more than fifty-percent of global packaged food sales in 2003 (U. S. Department of Agriculture, Global Food Industry Structure, 2007). Globalization and safety and defense of the nation’s food system are themes very much intertwined in the literature. As Cheek (2006) pointed out, “Today, global consumers are demanding a source-verified and disease-free food supply. . . Changing consumer attitudes have resulted in demands for greater food safety on the retail market.”...
Words: 1874 - Pages: 8
...otherwise, be lent, resold, hired out, or otherwise circulated without the publisher’s consent in any form of binding or cover other than that in which it is published and without similar conditions including this condition being imposed on the subsequent purchaser. ISBN 1-901795-27-6 Cover designed by Clare Hofmann Typeset by Philip Armstrong, Sheffield Printed by Biddles, Guildford CONTENTS List of Figures Acknowledgements 1 2 INTRODUCTION INDUSTRY STRUCTURE 2.1 An Examination of Corporate Structure 2.2 The Urge to Integrate 2.3 A Question of Balance 2.4 Just how Operationally Integrated? 2.5 Are there Tangible Benefits to Operational Integration? 2.6 Important Transition to Financial Vertical Integration 2.7 Integration or Atomisation? 2.8 Market Inefficiencies that Favour Integration 2.9 Firm Specific Arguments in Favour of Integration 2.10 Should Companies or Equity Markets Diversify? 2.11 Business Segment Response to Market and Firm Specific Risks and Challenges 2.12 Core capabilities A...
Words: 28798 - Pages: 116
...Give recent examples of forward integration, backward integration, and horizontal integration. A business strategy that involves a form of vertical integration (upstream supplier and downstream buyers) whereby activities are expanded to contain control of the direct distribution of its products. The advantages of forward integration consist of excluding competing suppliers, greater capacity to reach end customers and better admittance to information about end customers. (Example) Forward integration is when a farmer offers his crops at the local market rather than to a distribution center. (Example 2) Dell reaches its customer directly through the internet this cuts out traditional computer stores. Backward integration is vertical integration that combines a core business with its suppliers. The advantages of backward integration may include assurance of the pricing, quality and availability of supplies, and efficiencies gained from coordinating production of supplies with their consumption. A form of vertical integration that involves the purchase of suppliers in order to reduce dependency. (Example) A bakery business bought a wheat farm in order to reduce the risk associated with the dependency on flour. (Example 2) Many grocery stores now have their own brand products to compete the name brand products (less expensive). When a company expands its business into different products that are similar to current lines. Horizontal integration is the widening of a business at...
Words: 838 - Pages: 4
...Sabate Carriga Toma de decisiones y gestión de proyectos empresariales(PDGPE) Vocal:Francesc Tiñena Salvañà Compresion de datos e imagen (CDI) Secretari:Jose M. Cabré Garcia Empresa y entorno economico(EEE) QUALIFICACIÓ Qualificació numèrica: Qualificació descriptiva: Data: INDEX CHAPTER 1: INTRODUCTION CHAPTER 2: VERTICAL INTEGRATION 2.1. VERTICAL INTEGRATION 2.2: THE THREE A’S OF A SUPPLY CHAIN EXCELLENCE 2.2.1: AGILITY 2.2.2: ADAPTABILITY 2.2.3: ALIGNMENT 2.3: PORTER’S ANALYSIS 2.4: EXAMPLES: WAL-MART AND DELL CHAPTER 3: THE SYSTEM LOCK-IN 3.1 THE DELTA MODEL 3.2: THE SYSTEM LOCK-IN 3.3: EXAMPLE: FORD MOTOR CO 3.3.1: FORD MOTOR CO LOCK-IN CHAPTER 4 : ZARA 4.1 ZARA’S HISTORY 4.2 BUSINESS MODEL 4.2.1: PORTER’S ANALYSIS ON ZARA 4.2.2 PRODUCT LIFE CYCLE CURVE 7 9 9 13 15 16 17 19 30 36 36 39 41 42 45 45 47 47 49 1 4.2.3: KEY FACTORS OF SUCCESS 4.2.4: STRATEGIC DRAWBACKS 4.2.5: LOGISTICS AND SUPPLY CHAIN 4.2.6: STRATEGY 4.2.7: OPPORTUNITIES 4.3 THE MATHEMATICAL MODEL 4.4 FINANCIAL DATA 4.5 COMPETITORS CHAPTER 5 : BENETTON 5.1 BENETTON’S HISTORY 5.2 BUSINESS MODEL 5.2.1: STRENGHTS 5.2.2: WEAKNESSES 5.2.3:PARTNERSHIP 5.2.4: INTEGRATION 5.2.5: SUPPLY CHAIN HISTORY 5.2.6: NETWORKED MANUFACTURING 5.2.7: POSTPONEMENT IN DYEING 5.3: INFORMATION SYSTEM 5.3.1: THE SHOP 2 50 51 54 59 65 66 71 73 76 76 83 83 84 88 90 91 93 94 96 99 5.4: FINANCIAL DATA...
Words: 43564 - Pages: 175
...imitation and decreased market share. Supplier Power – Supplier power at present seems to be very weak as it relates to Harrington Collection. Harrington have eliminated suppliers having power over them by vertically integrating their operations where they manufacture apparels for themselves. If however Harrington Collection chooses to outsource its manufacturing, their supplier’s power would be dependent on the number of options they have in selecting other manufactures and how exclusive a quality service is supplied. If there are few manufacturers available to undertake Harrington Collections requirement, then the supplier power would be relatively strong. However at present with the vertical integration supplier power is very weak. With the presence of vertical integration in Harrington’s Collections operations, supplying themselves essentially renders suppliers power weak. This...
Words: 628 - Pages: 3
...of the company. In order maintain this leadership, it has had to adapt to the ever changing business environment and market conditions. With the emergence of new information technologies and ideas from new high-tech industries, it must evaluate how these tools can be utilized to further the business. Recently, virtual integration has been proven very successful to companies like Dell and Cisco. However, this approach is best suited for companies that have very few layers of suppliers as well as more centralized production. The Ford motor company cannot simply change their entire supply chain to fit this model. That being said, some of these theories and practices can still be incorporated into Ford’s current supply chain. These must be calculated changes, involving various departments within Ford’s organization, collaborating with their most valued and dynamic suppliers. With Ford already moving somewhat toward this direction with suppliers who provide complete subsystems for their automobiles, further changes in these areas should prove feasible with limited risk. Issues • Determining whether or not to incorporate the virtual integration model used by other recently successful firms such as Cisco and Dell • Uncertainty on how to utilize emerging information technologies to interact with suppliers • Many tiers of suppliers, all with different levels of sophistication • Fierce global competition • Pressure from shareholders to increase value of company ...
Words: 1042 - Pages: 5
...well as vertical integration. Disney is a prime example of how to achieve long-run success through the choices of business, the choice of how many activities to undertake, the choice of how many businesses to be in, the choice of how to manage a portfolio of businesses and the choice of how to create synergies between those businesses (3, p.191-221). All these choices and decisions are made through Disney’s corporate strategies and enabled them to reach long-term success. One will discuss Disney’s long-run success through a general approach. Eisner’s turnaround of the company and his specific implications/strategies will be examined in detail in part II. Disney could reach long-run success mainly through the creation of value due to diversification and the management and fostering of creativity, brand image and synergies between businesses (1, p.11-14). The most important part of Disney’s long-term success is due to its key strategic choices and incorporation of various diversification strategies. Disney created value mainly through “vertical integration” of its business lines, especially through the concept of forward integration. For example, Disney integrated production of movies and the final distribution in cinema’s or on television, especially through its acquisition of ABC in 1995 (1, p.6/7). Through this acquisition, Disney was able to extent its boundaries quickly and gain access to a wider level of distribution for its products. Furthermore, forward integration was accomplished...
Words: 552 - Pages: 3
...to the severe constraints related to small firms like they have limited resources for training and development, low capital expenditures, lack of knowledge regarding the products or markets of their large JIT customers. With all these constraints, sometimes it becomes difficult for a job shop to take advantage of JIT. This in turn also makes a negative effect on its operations. JIT, if used and not implemented effectively due to constraints also affect a small firm's position (Hesselbach & Herrmann, 2011). Answer 2: Vertical integration refers to a degree to which a company owns its upstream providers and its downstream buyer. It is an approach through which a firm can increase or decrease its level of control; it has over its inputs and output distributions (Wessels, 2006). A dairy farm could also use it to increase or decrease its level of controls by vertically integrating with a copy shop. It could be done in two ways that are backward integration and forward...
Words: 1157 - Pages: 5
...effectively than profit organization because they depend more on outside financing. 2. Recent examples of market penetration- Japanese electronics giant Sony Corporation is spending over $140 million in a new advertising and promotion drive to market its high-defintion television sets in the U.S. Recent example of market development- Adidas, who already has 1,500 stores in China, plans to open another 40 stores every month in China for the next 40 months. Recent example of product development- Wendy’s is testing fruit cups and milk as options in its kids’ meals. 3. Recent example of forward integration- Budget Rent-a- Car is opening car rental shops in Wal-Mart stores. Recent example of backward integration- Hotels, Inc. purchased a furniture producer. Recent example of horizontal integration- Federated Deparment Stores, the parent of Macy’s and Bloomingdale’s, acquired May Department stores. 4. Recent example of concentric diversification- UPS acquired Overnite to diversify its packaging business into the trucking business. Recent example of conglomerate diversification- Tupperware Corp., has entered and is growing its skin and beauty business through BeautiControl. 5. Recent example of Joint Venture- Burger King joined forces with Hungry Jacks in Australia. Recent example of retrenchment- Viacom is selling noncore assets including its theme parks, publishing business, radio stations,...
Words: 691 - Pages: 3
...The Company’s strategy is to continue to expand in the eyewear and eye care sector by growing its various businesses, whether through acquisitions or organically Being a global leader in the design, manufacture and distribution of sun and prescription eyewear of high technicaland stylistic quality, Luxottica’s mission is multifold: to improve the well-being and satisfaction of its customers while simultaneously creating value for its employees and the communities in which the Group operates. Every collection and every pair of eyewear is the result of an ongoing process of research and development aimed at anticipating and interpreting the needs, desires and aspirations of consumers all over the world as sun and prescription eyewear are increasingly perceived as a desirable and expressive accessory to complete one’s personal look. Luxottica delivers on its mission through its vertically integrated business model, manufacturing excellence, focus on service and geographically diversified footprint, which in turn have led to greater efficiency, flexibility and speed in product design, engineering, supply chain, manufacturing and logistics, whilst being uncompromising in quality. The achievement of high standards of quality reflects the Group’s strong technical and manufacturing know-how -the fruit of over 50 years of experience - and its constant commitment to technological innovation, style and design and the study of changing lifestyles and interpretation of fashion...
Words: 286 - Pages: 2
