Module-6

Integration between various levels of strategy

Integration strategy also goes by the name of the management control strategy. As the name
implies, it provides the business an option to have control over various processes
like competitors, suppliers, or distributors.

1. Vertical Integration • When pursuing a vertical integration strategy, a firm gets involved
in new portions of the value chain. This approach can be very attractive when a firm’s
suppliers or buyers have too much power over the firm and are becoming increasingly
profitable at the firm’s expense.
 Forward Integration • When pursuing a vertical integration strategy, a firm gets involved
in new portions of the value chain. This approach can be very attractive when a firm’s
suppliers or buyers have too much power over the firm and are becoming increasingly
profitable at the firm’s expense.
 Backward Integration • When pursuing a vertical integration strategy, a firm gets
involved in new portions of the value chain. This approach can be very attractive when a
firm’s suppliers or buyers have too much power over the firm and are becoming
increasingly profitable at the firm’s expense.
2. Horizontal Integration • It is a type of integration strategies pursued by a company in
order to strengthen its position in the industry. A corporate that implements this type of
strategy usually mergers or acquires another company that is in the same production
stage.
 Acquisition • An acquisition takes place when one company purchases another company.
Generally, the acquired company is smaller than the firm that purchases it.
 Merger • A merger is a combination of two or more organizations in which one acquires
the assets and liabilities of the other in exchange for shares or cash or both the
organization are dissolved and the assets and liabilities are combined and new stock is
issued.
 Strategic Alliance • A strategic alliance is a cooperative arrangement between two or
more organizations that does not involve the creation of a new entity.

Balanced Score Card

A balanced scorecard (BSC) is defined as a management system that provides feedback on both
internal business processes and external outcomes to continuously improve strategic performance
and results. By bringing together measures around internal processes and external outcomes, a
balanced scorecard supports continuous improvement at the level of strategic performance and
results.
 The balanced scorecard is a strategic management tool that views the organization from different
perspectives, usually the following:

 Financial: The perspective of your shareholders

 Customer: What your customers experience and perceive 
 Business process: The key processes you use to meet and exceed customer and shareholder
requirements
 Learning and growth: How you foster ongoing change and continuous improvement

Measuring performance with Balanced Score Card

The balanced scorecard philosophy need not apply only at the organizational level. A balanced
approach to employee performance appraisal is an effective way of getting a complete look at an
employee's work performance, not just a partial view. Too often, employee performance plans with
their elements and standards measure behaviors, actions, or processes without also measuring the
results of employees' work. By measuring only behaviors or actions in employee performance
plans, an organization might find that most of its employees are appraised as Outstanding when the
organization as a whole has failed to meet its objectives.

By using balanced measures at the organizational level, and by sharing the results with supervisors,
teams, and employees, managers are providing the information needed to align employee
performance plans with organizational goals. By balancing the measures used in employee
performance plans, the performance picture becomes complete.

STRATEGIC CONTROLS

Strategic control is related to that aspect of strategic management through which an organization
ensures whether it is achieving its objectives contemplated in the strategic action. If not, what
corrective actions are required for strategic effectiveness.

ESTABLISHING STRATEGIC CONTROLS

Problems in measuring performance in strategic controls

1. Motivational Problems:

The first problem in strategic control is the motivation of managers (strategists) to evaluate

whether they have chosen correct strategy after its results are available. Often, two problems are

involved in motivation to evaluate the strategy –

i. Psychological barriers and

ii. Lack of direct relationship between performance and rewards.

2. Operational Problems:

Even if managers agree to evaluate the strategy, the problem of strategic evaluation is not over,

though a beginning has been made. This is so because strategic evaluation is a nebulous process;

many factors are not as clear as the managers would like these to be. These factors are in the

areas of determination of evaluative criteria, performance measurement, and taking suitable

corrective actions. All these are involved in strategic control.