Strategic Management

MGT 5005 – 2023-25 - Credits: 3

Session 13
Corporate Strategies

Dr. Harini K N
 Value Chain Analysis
❖ Value chain analysis is generally done for a firm rather than a specific product category.

❖ Specific analyses for individual product categories within a company might be relevant in cases where a
company operates in diverse markets or has significantly different product lines.

Firm Infrastructure
Human Resource Management
ACTIVITIES
SUPPORT

Technology Development

PROFIT MARGIN
Amazon Retail goods Procurement
Amazon Prime Video
Amazon Web Services

Inbound Operations Outbound Marketing and Service

logistics logistics sales
Amazon Retail goods
Amazon Prime Video
Amazon Web Services

PRIMARY ACTIVITIES
 The Strategic Management Process
External
Analysis

Strategic Strategy Competitive

Mission Objectives
Choice Implementation Advantage

Why do Firms Carry Out Corporate Strategy? Where to compete?

Internal
Analysis
Form/ Type of Entry?
• Firms carry out corporate strategy to achieve Corporate Level
specific objectives like growth & profitability Strategy • Horizontal and Vertical
(new markets, product lines) and enhance their
overall competitiveness (resource allocation, Integration
investments, and risk management). • Diversification
Means/ Mode of Entry?
• Corporate strategy allows firms to adapt to • Strategic Alliances
changing environments and capitalize on new
opportunities like technological advancements, • Mergers &
shifts in consumer preferences, strategic partnerships Acquisitions
or changes in regulatory environments.
 Integration
Provides Key
Integration Firm’s Retailer/
Distributor
Input

Integration involves a firm

moving into the same or new
part/ stage of the value system
Forward that it is already within.
Backward
Direct Competitor

Integration Description Example Benefits Drawbacks

Type
Horizontal involves PVR-INOX Merger, 2023 • Acquiring or merging with • Merging different corporate
integration moving in competitors can enhance a cultures and operations can
the same BYJU'S acquired Aakash Edu., 2021 company's market power, be complex and time-
stage of the and hence market share. consuming.
value system. Marriott International's acquisition
of Starwood Hotels & Resorts, 2016
• Combining operations with • Reduced competition can
Vodafone Idea merger, 2018 similar businesses can result stifle innovation in the
in economies of scale. industry.
 Integration
Firm’s Retailer/
Provides Key
Distributor
Input
Benefits Drawbacks
• Streamlines • Acquiring for different
operations, stages of production
reduces can be expensive.
reliance on
Backward Direct Competitor Forward external
• Firms may become less
adaptable to market
suppliers/
changes if they are
Integration Type Examples parties, and
heavily invested in
potentially
Vertical integration involves moving in different levels of the value system. specific processes or
lowers costs.
technologies.
Vertical integration ❖ Apple designs and manufactures the components used in its
• Greater
backward (allows a company products, such as processors and memory chips. • Managing a vertically
control over
to control its own inputs and ❖ Tesla designs and manufactures its own batteries and electric integrated company
production/
suppliers.) motors. can be more complex
distribution
❖ Tata Steel's iron ore mining than managing a
processes often
❖ Patanjali Ayurved's herbal and Ayurvedic industry (setting up single-stage
leads to more
its own farms and herbal gardens). operation.
consistent
Vertical integration forward ❖ Amul, the dairy cooperative, integrated into the distribution product quality,
(allows a company to control and sales of its own dairy products (milk, cheese, and butter). marketing, and
its own distribution ❖ The oil company ExxonMobil owns and operates its own gas sales.
channels and sales.) stations.
 Diversification
Other Current Other Firms using diversification
Businesses Businesses Businesses strategies enter entirely new
industries. Diversification
No Unrelated Related Many requires moving into an
Links Links entirely new value system.
Adding new products, services, or markets
Diversification Description Examples Benefits Drawbacks
Type
Related involves the • Hero MotoCorp, diverse range of Firms can leverage their Firms may face stiffer competition
diversification company expanding businesses, including two-wheelers, bicycles, existing skills, in new unfamiliar markets.
into new industries and components. knowledge, and brand
Managing diverse businesses can be
or markets related • The Walt Disney Company, which started recognition to enter new
complex and require different
to its core business/ as a cartoon studio and has since diversified markets.
skillsets.
competencies. into theme parks, media, and consumer
Can help spread risk
products.
and reduce dependence
Unrelated involves the • Tata Sons Limited, holding company of the on a single market or Firms may lack the necessary skills
diversification company expanding Tata Group, has a diverse range of product. and knowledge to succeed in
into new industries businesses. unfamiliar businesses.
or markets • L&T (Larsen & Toubro), an engineering, Entering new markets
can provide Realizing financial or operational
unrelated to its core construction, and manufacturing company,
opportunities for synergies from unrelated
business/ has diversified into the power, infrastructure,
growth and businesses can be difficult.
competencies. and financial services industries.
profitability.
Diversification Example

https://www.youtube.com/watch?v=Z9siTPIGt40
 Questions

Is Zomato’s acquisition of Blinkit a horizontal integration or related diversification?

Exhibits elements of both horizontal integration and related diversification!
Horizontal Integration Related diversification
Both Zomato (restaurant) and Blinkit (groceries) Both companies are involved in the broader food and
operate in the food delivery space. convenience ecosystem but cater to different needs.
Crux – If the business sees that there is a high degree of overlap between what the entities do (making it a
competitor) then horizontal integration takes precedence over diversification! But if the objective is to gain a
foothold in a different market and diversify offerings, then the diversification element becomes prominent.
 Questions

Flipkart acquired Myntra, 2014

Exhibits elements of both horizontal integration and related diversification!
Horizontal Integration Related diversification
Both Myntra and Flipkart are involved in e- Both Myntra (primarily focused on fashion and lifestyle
commerce. (Compete in clothing space) products) and Flipkart (offers broader range of merchandise)
are involved in e-commerce, but have distinct focus.
Crux – If the business sees that there is a high degree of overlap between what the entities do (making it a
competitor) then horizontal integration takes precedence over diversification! But if the objective is to gain a
foothold in a different market and diversify offerings, then the diversification element becomes prominent.
While some overlap existed in fashion products, it wasn't substantial enough to categorize it as pure
horizontal integration.