Running head: CORPORATE LEVE STRATEGY 1

Corporate-Level Strategy

Student’s Name

Institutional Affiliation
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Corporate-Level Strategy

Chapter 9 questions

Question 1

In procedure definition processes, the final aspect involves decision of corporate level

systems. Every plan an organization has is driven by corporate level systems. They determine the

kind of methodology that is relevant and profitable to the organization both in the short and long

run (Hill, Jones & Schilling, 2014). When organizations decide to venture into new markets or

products, two levels of action have always to be implemented. First, it should conceive and

action plan and processes or procedures for each special unit in the industries it seeks to build.

Secondly, it should “build up a more elevated amount multiusers model that legitimizes its

entrance into various organizations and commercial enterprises” (Hill, Jones & Schilling, 2014).

Multi-business models should give clarity on the reasons why venturing into a new products will

help the organization to effectively use its business systems and practical skills to increase its

production.

Question 2

Horizontal integration refers to the process through which a company increases its

production and supply chain. The company achieves this through mergers, internal expansion or

acquisition of new premises. Ultimately, this leads to monopoly. Most organizations that use

horizontal coordination to gain competitive advantage also use corporate level techniques to join

companies to gain more access to the market and enjoy a competitive advantage. Companies
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which concentrate in one line of activities have always benefited by concentrating its money,

assets, mechanical and administrative skills in one line of production.

This is significant when it comes to establishing and changing the business ventures that

require information regarding business assets. When an organization realized the benefits of a

merger, it can now improve its administration or products, reduce competition from like-minded

firms, offer its previous assets and products, and deliver its recently expanded items or benefits.

Should the organization be affected by level-mix, the organization’s quality diminishes owing to

the disappearance of the normal cooperative energies regardless of the financial muscles it can

pull following the merger. Various burdens can result in adverse effects should the side effects of

the merger conceive less adaptability due to its big nature and size.

Question3

Vertical integration is a strategy in business where two or more firms combine to control

different stages of production. For instance, firms may control suppliers, distributors and retail

locations. In simple terms, vertical integration is undertaken with the aim of controlling the

supply chain. Today, the merging of companies must have a multi business model which

determines the mode of entry into a new business thus enhancing efficiency (Amin & Smith,

2017). Models that legitimize vertical integration is rooted on the foundation that entering

business ventures that enhances the business through the reduction of its operational costs and

improving productivity. Vertical integration enables organizations to decrease costs, enhances

strict quality control, and promises a stronger bond of data control networks.

Merits:
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The most conspicuous and outstanding benefit of vertical integration is the reduction of

costs of the company. Such organizations don’t have the hustle of sourcing for assets or supplies,

since they have already secured them. Instead, their concentration is ensuring they have a steady

supply of customers and that their items are of good quality. Furthermore, organizations that

involve in vertical integration have increased opportunities for internal employment, which,

significant for it enhances the size and quality of staff within the organization. Besides, the

organization can venture into re-using or recycling of some of its recyclable items thus, cutting

down some costs. In addition, it enables the organization to be well prepared with various brands

of products.

Demerits:

Although vertical integration is beneficial to the business, the greatest undoing of the

merger is the difficulty with which the organization may take adjusting to the change. In terms of

coming up with new items, the company cannot just get at it once (Argyres & Mostafa, 2016).

They must plan, channel enough finances and energy as well as brainstorm on how to make it

happen themselves. This basically is time consuming. Further, they are limited on what line of

products to offer. Because they have the end product in mind, a lot of financing is required to

actualize the goals. They need money to buy new production lines, employ many people, and

take great control of their newly procured offices. For this reason, vertical integration seems

almost impossible for smaller organizations. They are constrained to what they can offer. With a

specific end goal to coordinate vertically, an

Question4
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Strategic outsourcing involves hiring offshore teams to conduct specific tasks for the

company. Most companies involve in outsourcing, especially the administration of their

frameworks, at the same time keeping other administrative functions within the organization.

Many organizations engage in outsourcing to solidify their action plans and enlarge their

benefits. Outsourcing begins with differentiating the worthy exercises that give the company a

comparative advantage (Globerman & Vining, 2017). This is shielded from the outside world to

ensure it is the company’s secret. The directors then audit the nonessential exercise that can be

performed by external organizations with ease and efficiency.

Outsourcing results in the reduction of costs given that the cost of hiring an external

organization to conduct the task compared to internally doing it is lower. Further, the

organization may also benefit by separating it’s last items in a good way by hiring external

experts.

Chapter 10 questions

Question 1

Entering new markets and venturing into the production of new products unique to the

company’s initial produce is what we call diversification. Organizations with action plans that

require the utilization of its many resources will enter into diversification. Various resources, for

instance, stocks and bonds, do not respond the same way to unfavorable conditions. Similarly,

mixing production decreases the degree with which the business can be affected by changes in

the market (Bakke & Gu, 2017). Provided that two lines of production in an organization run
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inversely, an increase in the market value of another item counters the fall in the market for

another.

Question 2

Related expansion compares with unrelated diversification. Related diversification

involves the expansion of business ventures into new products but in the same line of production

it does currently. This enables the organization to gain advantages through the sharing of skills,

assets, making use of abilities and packaging of items (Bakke & Gu, 2017). Related expansion

entails excellent innovation, assembling and the promotion of the raw materials that can be built

into new products.

Unrelated diversification is the addition of new lines of products that penetrate and

command the market. Such organizations that seek to venture into unrelated diversification don’t

require special skills but only money and the necessary assets. This can bring the company much

profitability.

Question 3

Diversified systems are generally unsuccessful for several reasons despite their large

sizes. One of the potential reasons could be the unpredictability of markets coupled with

venturing into new lines of production. Also, the organization may ignore some important

considerations as it ventures into new production lines.

Besides, the lack of institutional backing explains the failure of most mergers. Putting the

right staff in place to support the system is very vital, without which the whole thing collapses.
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Furthermore, some activities require much finance to establish. These include enhancements

needed in the company. When they fail to be successful, they lead to the failure of the whole

organization.

Question 4

Conducting an assessment test on the procurement is vital since it helps the company

have a stronger view of the take over as well as minimizes the risk of purchasing an organization

with a weak action plan. Furthermore, it enhances the assessment of how to acquire new items

and necessities for the new venture to avoid culture clashes (Madsen & Walker, 2015). Careful

screening is aimed at reducing the cost of purchasing an organization that is weak in terms of its

action plan. The best way to engage a merger is to completely take over the organization with its

managers as well.

However, regardless of the many advantages of screening, unless the organization has a

strong leadership plan, it will fail to accomplish its aims. Therefore, the lack of a proper

leadership outline in terms of hierarchy is a great setback to mergers.

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References

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an

integrated approach. Cengage Learning.

Madsen, T. L., & Walker, G. (2015). Modern competitive strategy. McGraw Hill.

Amin, A., & Smith, I. (2017). Vertical integration or disintegration? The case of the UK car parts

industry. In Restructuring the global automobile industry (pp. 169-199). Routledge.

Argyres, N., & Mostafa, R. (2016). Knowledge inheritance, vertical integration, and entrant

survival in the early US auto industry. Academy of Management Journal, 59(4), 1474-

1492.

Bakke, T. E., & Gu, T. (2017). Diversification and cash dynamics. Journal of Financial

Economics, 123(3), 580-601.

Globerman, S., & Vining, A. R. (2017). The outsourcing decision: A strategic framework.

In Global outsourcing strategies (pp. 27-40). Routledge.