Strategic Management Class Forward Integration: Gaining Increased

Strategic Management Class

Forward Integration: gaining increased control over distributors, backward integration- seeking ownership over suppliers

Forward integration is when the manufacturer will acquire the channels of production and output to achieve greater economies of scale. These conditions are implemented when there are higher levels of trade and competition among firms. The way the strategy is organized is to look at the channels of production and output. Then, introduce ways to reduce costs and increase productivity. This was successful in helping to implement transformations in their operating structure. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Horizontal integration-seeking ownership/control over competitors

Horizontal integration is when a corporation will seek out control over competitors by making them into subsidiaries. The conditions that led to these changes were increased amounts of competition inside the marketplace. The basic steps that were used to organize this strategy requires: finding targeted firms, making an offer and quickly closing the transaction. These ideas have made corporations more successful by allowing them to understand changes inside the marketplace. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Market penetration-seeking to increase the market share for present products

This is when a firm will increase their penetration by enhancing the available supply of products in the marketplace. The conditions for this strategy are from severe shortages of supplies because of disruptions. The steps that are used to organize the strategy include: looking for sudden changes and quickly reacting. These ideas can be successful up to a point. Then, the market conditions will change and adjustments must occur. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Market Development-introduce existing products or services into new geographic

This is using strategies tested in other areas and it is expanding upon them by offering these products to new regions. The conditions that led to the implementation of these ideas involve a successful target marketing campaign inside a specific area. These techniques are being used to promote the firms merchandise in new locations. The basic steps that were used to organize the strategy include: successfully testing the product, having confidence in the results and rolling out the strategy in other areas. This is successful, in allowing executives to reduce the risks and see the impact of utilizing certain tactics. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Product development- seeking increased sales by improving or modifying present products

This is when the marketing strategy is adapted to various segments of customers. The conditions that led to the implementation of this strategy were stagnant sales in comparison with past trends. The basic steps used to organize this strategy include: determining the various demographics, analyzing their responses and making adjustments to the strategy. These ideas have been successfully utilized in the past by helping everyone to understand what attributes of the product are most important to certain customers. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Related Diversification- adding new but related products or services

This occurs when the firm wants to understand the impact of adding new products and services inside the marketplace by promoting them to existing customers. The conditions that led to the use of this strategy are shifting demand from customers. The steps that were utilized include: understanding what products / services are most important to them, addressing these needs and then continuing to follow up with customers. When this is used consistently, these ideas are helping everyone to understand the marketplace and how to quickly react to sudden changes. (Witcher, 2010) (Haines, 1998) (Daft, 2010)

Unrelated diversification adding new unrelated products retrenchment-regroup through asset reduction

This is when products are added based upon an assessment being conducted. The conditions that allowed for these kinds of changes to occur were stagnant sales. The steps that were utilized include: evaluating the product line and determining where to make changes. These ideas have proven to be unsuccessful by not understanding the needs of customers. (Witcher, 2010) (Haines, 1998) (Daft, 2010)