VERTICAL INTEGRATION STRATEGIES

CONCENTRATION STRATEGIES Advantage and Disadvantage of a Vertical Integration

Strategies
Advantage and DIsvantages of a Concentration Strategy : Vertical Integration and Transaction cost
Advantage : Allows an organization to master one Substitutes for Full Vertical Integration :Partial Vertical
bussines. Integration ,Taper Integration ,Quasi Integration,Long
Disadvantage :Dependence on one area is problem if the Term Agreement
industry is unstable
DIVERSIFICATION
STRATEGIES
Portfolio Management Related Diversification ( Based On Similarities)
Synergy ( Specific Market)
managing the mix of businesses in
1. Tangible Relatedness
the corporate portfolio. divide
2. Intangible Relatedness
organizational resources among
diversified units and where to GROUP 5 Unrelated Diversification
invest new capital, as well as which The Creation Synergy
businesses to divest. CORPORATE- 1.Strategic fit
Destination Portfolio Analysis
LEVEL STRATEGY 2. Organizational fit
Portfolio analysis can also be adapted to

The Boston
tourism, Portfolio analysis is a useful tool
Consulting Group
for tourist destination management and
(BCG) Matrix
can help focus marketing and promotion
The BCG Matrix is
activities. attractiveness axis included RESTRUCTURING
market size, market growth rate,
based on two factors:
disposable income per capita, average
business growth rate
daily spending, seasonality, distance from
and relative market
destination, benefits sought by tourists
share.
when they travel abroad, and accessibility
by air.
e. Changes to Organizational d. Leveraged Buyouts
Design Leveraged buyouts (LBOs)
Organizational design can be a involve the private purchase of a
potent force in restructuring efforts. business unit by managers,
For example, as organizations employees, unions, or private
diversify, top managers have a more investors. For example, Planet
difficult time processing the vast Hollywood is now a much smaller
amounts of diverse infor- mation company and is privately owned,
that are needed to appropriately having been a publicly traded
control each business. company before its LBO.
AND
MERGERS AND ACQUISITIONS
a. Consolidation
Industry consolidation, which
b. Merger Performance
The shareholders of an acquired firm
occurs as competitors merge, typically enjoy a huge payoff because
is a major trend. Corporate they receive an enormous premium
raiding is another interesting over market value for the shares of
phenomenon associated with stock they hold before the acquisition
mergers and acquisition announcement.
Strategic Restructuring
c. Successful and Unsuccessful Mergers and Acquisition
Transformation, renewal, reorientation, and restructuring Acquisition premiums are the percentage paid for shares of
are all words that describe the same general phenomenon: stock above their market value before the acquisition
a radical change in how business is conducted. announcement. Complementarity occurs when two companies
have strengths in different areas that complement each other.
c. Chapter 11 Reorganization b. Refocusing a. Turnaround Strategies and Downsizing
Chapter XI provides a Corporate Turnaround strategies (sometimes called retrenchment)
proceeding for an organization Assets can involve workforce reductions, selling assets to
to work out a plan or Downscoping reduce debt, outsourcing unprofitable activities,
arrangement for solving its Divestitures implementation of tighter cost or quality controls, or
financial problems under the new policies that emphasize quality or efficiency.
supervision of a federal court.