Monday March 27, 2017 - Class #16: Other Competitive Strategies

 a) Scope of Operations
 This refers to the range of activities the firm performs internally, the breath and depth of its products and services offered to the extent of its geographic market presence and its mix of businesses.


  b) Vertical and Horizontal Integration Strategy
When a company wants to grow, it has two options: expand its current business or go into business with other companies through acquisition or merger. If it chooses the acquisition option, it can do so in a way that strategically enhances its current operations through vertical or horizontal integration.

• A horizontal integration consists of companies that acquire a similar company in the same industry, 
• while a vertical integration consists of companies that acquire a company that operates either before or after the acquiring company in the production process.

Vertical 

Horizontal

Problems 

    c) Outsourcing
Outsourcing is a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. Outsourcing is an effective cost-saving strategy when used properly. It is sometimes more affordable to purchase a good from companies with than it is to produce the good internally.

    d) Alliances & Partnerships

A partnership company is formed when the parties involved agree to share the business’s profits or losses proportionately. This business is a separate entity, jointly owned and operated by the people in the partnership. An alliance is formed when businesses agree to collaborate without giving up their independent status.

A strategic alliance (also see strategic partnership) is an agreement between two or more parties to pursue a set of agreed upon objectives needed while remaining independent organizations. A strategic alliance will usually fall short of a legal partnership entity, agency, or corporate affiliate relationship.

Alliances

Partnership: Example