INTEGRATION

1. Backward Integration
✔Netflix Started their Own Production and Shows
Netflix originally started with renting DVDs through mail service. Company then shifted to
deliver on-demand entertainment globally. Netflix then started to develop their own
production and shows which is a real-world industry example for backward integration.

✔Acer acquires stake in a venture of Texas Instruments

Acer’s product range includes laptop and desktop PCs, tablets, smartphones, monitors,
projectors, etc. The synergies of this business activity were to produce semiconductors
and additional electronic components.

✔Amazon started “Amazon Publishing”

In 1995 Amazon started as an online book retailer (internet bookstore) procuring books
from publishers. In 2009 Amazon started “Amazon Publishing” which allows them to
publish books. After the above, Amazon may receive a cut on both as publisher and as
bookseller if a reader buys one of its titles.

2. Forward integration
 Nike introduces Direct-to-Consumer Sales since 2011
The sportswear giant Nike has grown Direct-to-Consumer sales since 2011 which
enables them to sell their products directly to their end customers, without selling
through the value chain of the outlet, retailer, distributor, wholesaler. This is an industry
example of forward integration.

 McDonald’s acquired Dynamic Yield to improve their Digital Customer

Experience
McDonald’s acquired a tech company called Dynamic Yield in 2019. Company plans to
improve their digital customer experience touchpoints with this acquiring. The technology
allows menus at McDonald’s drive-thrus to change based on different factors including
weather, current traffic, and more. This is an example of forward integration.

 The Walt Disney Company introduced Disney+

The Walt Disney Company introduced Disney+ in 2019, which enables them to stream
on-demand videos directly to their end customers.

3. HORIZONTAL INTEGRATION

 One of the most definitive examples of horizontal integration was the acquisition of
Instagram by Facebook (now Meta) in 2012 for a reported $1 billion. Both companies
operated in the same industry (social media) and shared similar production stages in
their photo-sharing services. Facebook sought to strengthen its position in the social
sharing space and saw the acquisition of Instagram as an opportunity to grow its market
share, reduce competition, and gain access to new audiences. Facebook realized all of
these through its acquisition. Instagram is now owned by Facebook but still operates
independently as its own social media platform.

 Another notable example of a horizontal integration was Walt Disney Company's $7.4
billion acquisition of Pixar Animation Studios in 2006.
  Officially, Exxon bought Mobil for $75.3 billion, and the purchase enabled Exxon to gain
access to Mobile's gas stations as well as its product reserves.5 Thanks to the pooling
of resources, increased efficiency in operations, and streamlining of procedures, today,
ExxonMobil is one of the biggest oil companies in the world.

2. INTENSIVE
MARKET DEVELOPMENT STRATEGY
 Adidas who continue to expand their global reach and attract new demographics of
customers with their existing footwear products.

 Spotify also got into market development, which resulted in growth. They offer music-
related services. For instance, by partnering up with Facebook in 2010, Spotify created
options where you can send songs to your friends via Facebook or on Instagram (which
is owned by Facebook)

 Starbucks uses market development as its secondary strategy for intensive growth.

This strategy supports business growth by generating revenues in new markets or new
market segments by offering the company’s current product mix of food and beverages.
For example, Starbucks Coffee offers its current products to more consumers by
entering more countries, such as in Africa and the Middle East. In market development,
intensive growth opportunities are exploited by strategically growing the company’s
consumer base, which equates to a larger volume of sales of food, beverages, and other
merchandise.

Market Penetration
 Starbucks Coffee’s this strategy supports the company’s intensive growth by maximizing
revenues from existing markets, using the same or existing food and beverage products.
To maximize revenues and growth in these current markets, the company applies
market penetration by opening more company-owned stores or licensed/franchised café
locations. For example, Starbucks aims to open more stores in countries where the
business has a weak presence, such as in Africa and the Middle East.

 Market penetration is another major intensive growth strategy that optimizes Nike's
profitability and competitiveness. The strategic objective of market penetration is to
increase the company's customer base or market share, by selling more of
existing sporting goods to current markets.

 McDonald’s has stayed on as the world’s largest restaurant chain by revenue, mainly
due to its aggressive market penetration strategies through Clever Pricing, Extensive
Marketing And Advertising, Increased Distribution Through Speedy Service, Drive
Throughs and Deliveries and Innovative Product Bundling Plus Localized Offerings/
Product development
 As another secondary intensive growth strategy, product development contributes to
Starbucks Corporation’s growth through new products or variants that add to business
revenues. For example, through product innovation, the company offers brewing
equipment, as well as ready-to-drink products available at grocery stores. Product
development may also come with mergers and acquisitions, such as when Starbucks
started offering Frappuccino following the acquisition of The Coffee Connection. In this
intensive growth strategy, new products are seen as ways of increasing sales revenues,
especially in coffeehouse markets that are already saturated. 

 Google began as an online search company, but it now offers hundreds of products and
services, such as Gmail, YouTube, the Android operating system, Chrome web browser,
and more. Google’s broad product portfolio makes it one of the world-leading companies
in the high-tech marketplace. To maintain its competitive advantage, the company is
constantly innovating. 

 Netflix started in 1997 as a DVD mail rental business. In 2007, the company shifted its
business model and decided to go digital with the introduction of streaming media.
Customers can now access a wide range of movies, TV series, and original Netflix
content for an affordable, no-commitment monthly fee.

3. DIVERSIFICATION
RELATED DIVERSIFICATION

 Honda Motor Company is an excellent example of how a core strength may be

used through related diversification. Although Honda is best known for its
automobiles and trucks, the firm began as a motorcycle manufacturer. Honda
has a unique capacity to create tiny, reliable engines as a result of competing in
this industry. Honda was successful in part because it harnessed this expertise
within its new business when leaders opted to diversify into the vehicle industry.
Honda’s engine-building expertise was also put to use in the all-terrain vehicle,
lawnmower, and boat motor industries. Honda has just built the HA-420
HondaJet, an energy-efficient six-passenger aircraft that is currently awaiting
FAA approval.

 Samsung Related Diversification Samsung Group started out as a grocery store

and then transitioned into the wool trade and various other trading markets until it
finally found its niche building television sets in the 1970s (Samsung Group,
2018). From this point on it penetrated into the technology sector and expanded
its products. The organization employed related diversification by entering into
the personal computer market, computer hardware, mobile phones, smart
phones, media entertainment systems, home appliances, and watches.
 Amazon was originally an online bookseller, and it was a very successful one
after its launch in 1995. Books were easy to source and distribute but Jeff Bezos
planned to diversify. Amazon began selling video games and other multimedia in
1998. Before long, the company sold consumer electronics, software, homeware,
 toys and more. The goal of Amazon was always to diversify from an ecommerce
website to a fully loaded tech giant. 

UNRELATED
 Washing Machines and Jet Engines
Companies like General Electric (GE) manufacture all kind of things, including washing
machines and jet engines. Even if doing so implies always a manufacturing process,
those products are radically different and totally unrelated. How many washing machines
are sold has nothing to do with how many jet engines you can place to Airbus or Boeing.
This is a great example of unrelated diversification, because you can leverage your core
competences (manufacturing, engineering) to produce different products used in vastly
different markets that have unrelated sales performance. It is great because the
company does not have to develop any new skill, they can just leverage the skills they
have to diversify. This is the kind of unrelated diversification you should target.

 Red Bull actually owns and runs – not just sponsors – many extreme sports
event, and even a TV channel. THis is not really related with the soft drink
industry.
 Samsung Group also uses the unrelated diversification strategy by entering into
the travel industry, medical industry, insurance industry, and construction
industry. The Samsung group is divided into four groups according to Burris
(2018), electronics, engineering, construction, and most high-tech products. It
also has affiliate organizations in retail, food, chemicals, logistics, entertainment,
paper, and telecom (fiber Optic)

4. DEFENSIVE
RETRENCHMENT
 According to Do Jones, A news Corp Company. Ford Motor Co. 's retrenchment over the
next five years, unveiled Friday, will involve closing five North American plants and
eliminating a total of about 17,000 additional jobs world-wide on top of about 18,000 cut
since January 2001. The huge retreat is more than a response to the auto industry's
chronic overcapacity or the costly Firestone tire scandal, although those are both
important factors. Ford's crackup also illustrates how fast corporate strategies can come
unraveled in a world where technology, consumer taste and financial markets are all
changing at unprecedented speed.

 Netflix will let go of roughly 15 employees in its marketing department as the

streamer plans to pare down its marketing operation and strategy, according to an
individual with knowledge of the layoffs. The layoffs are only a small percentage of
Netflix's overall workforce, some 6,900 employees.

 Starbucks is laying off 5 percent of its corporate workforce, according to a memo
obtained by CNBC. The coffee giant had previously indicated it would cut non-retail
employees as it shakes up its organizational structure. CEO Kevin Johnson says
impacted employees were in roles connected to work that had been “eliminated” or
“deprioritized” in Starbucks’ streamlining efforts.
 LIQUIDATION
Example of a Company that uses Liquidation strategy is Steel Corporation of the
Philippines where corporation has failed to comply with the provisions of the
 rehabilitation plan and with the orders of the rehabilitation court. The company has also
failed to achieve the targets in the approved rehabilitation plan. The move to liquidate
Steel Corp. is seen as a way to resolve the company's outstanding financial obligations
to a consortium of creditor-banks, which include Planters Bank, Chinabank, Land Bank
of the Philippines, BDO and DEG.

 MF Global Company did used the liquidation startegy because they experienced a
meltdown of its financial condition, caused by improper transfers of over a million from
customer accounts to a MF broker-dealer account to cover losses created by trading
losses.

 In January 2013, REDD-Monitor wrote about MH Carbon, a company selling carbon

credits to the public as investments. REDD-Monitor’s question, as with any company
doing this, is whether the company is a boiler room scam. Last week, MH Carbon went
into voluntary liquidation

DIVESTITURE
 Example of divestiture is PLDT divesting entire Meralco stake.

MANILA, Philippines – PLDT Inc. is in talks with foreign investors for the sale of its
remaining 8.74-percent stake in Manila Electric Co. (Meralco). PLDT owns a 25-percent
stake in Beacon Electric Asset Holdings Inc. after selling 25 percent to Metro Pacific
Investment Corp. Beacon, in turn, owns 35 percent of Meralco.

 PepsiCo divestment of Tropicana, Naked Juice reflects evolving focus on zero-

calorie beverages, water, PepsiCo’s sale of a majority stake of its North American
juice portfolio to private equity.

 With the acquisition of The May Department Stores Company in 2005, the regional
nameplates were retired and replaced by the Macy's and Bloomingdale's brands
nationwide by 2006. Ultimately, Federated itself was renamed Macy's, Inc. in 2007.