1.

Define and give example of three integrative strategies

(1)Forward- control over distributors. Ex. Burger King offers delivery in select markets. (2)
Backward- control of a firm's suppliers. Ex. Constellation Brands purchased glassbottle factories. (3)
Horizontal integration means increased control over competitors. Ex.Facebook's acquisition of
instagram.

company Intel supplies Dell with intermediate goods—its processors—that are placed within
Dell's hardware

The three integrative strategies are forward integration, backward integration and horizontal
integration. Forward integration is the gaining of ownership or increased control over distributors or
retailers. An example of forward integration is Gateway Computer Company opening its own chain of
retail computer stores. Backward integration is the seeking of ownership or increased control of a firm's
suppliers. J.P. Morgan outsourcing its technology operations to firms such as EDS and IBM is an example
of backward integration. Horizontal integration is the seeking of ownership or increased control over
competitors. An example of horizontal integration is when Reader's Digest Association acquired Reiman
Publications LLC.

(1) List some guidelines for when forward integration would be a particularly good strategy to
pursue

(1)Distributors are incapable in meeting firm’s needs(2)availability of quality distributors is

limited(3)Firm grows markedly(4)Has capital and human resource(5)Productions are high(6)Distributors
have high profit margins

Some guidelines for when forward integration would be an especially effective strategy are: (1) when an
organization's present distributors are especially expensive, unreliable, or incapable of meeting the
firm's distribution needs; (2) when the availability of quality distributors is so limited as to offer a
competitive advantage to those firms that integrate forward; (3) when an organization competes in an
industry that is growing and is expected to continue to grow markedly; (4) when an organization has
both the capital and human resources needed to manage the new business of distributing its own
products; (5) when the advantages of stable production are particularly high; and (6) when present
distributors or retailers have high profit margins.

(2) Define and give examples of joint venture, retrenchment, divestiture and liquidation
Joint venture-2 or more firm form for profit.Ex.IBM joint w/ Twitter&Facebook, Retrenchment-
regroup of org.Ex. Split of Hero Honda, Divestiture-selling a division.Ex.P&G sold Tide,
Liquidation- sell assets.Ex. Kidsco sold its stocks and assets

A joint venture is when two or more companies form a temporary partnership or consortium for the
purpose of capitalizing on some opportunity. An example of this is when Dell Computer and EMC
Corporation created a sales and development alliance. Retrenchment is regrouping through cost and
asset reduction to reverse declining sales and profit. Net2Phone cutting 110 jobs in 2002 as part of its
restructuring plan is an example of retrenchment. Selling a division or part of an organization is called
divestiture. An example of this is Tyco International selling off its plastics department, which accounts
for about 4 percent of Tyco's sales. Liquidation is the selling off of a company's assets, in parts, for their
tangible worth. When Service Merchandise liquidated in 2002, it closed all of its 216 stores in 32 states.

(3) Discuss Michael Porter’s five generic strategies

First, type 1 offers products to a wide range customer at the lower Price on the market.
Second, type 2 offers products to a wide range customer at the best Price value on the market.
Third, type 3 aimed at producing products considered unique industry wide and directed at
consumers who are relatively Price insensitive. Fourth, type 4 offers products to a small range
of customers at the lowest Price. Finally, Type 5 offers products to a small range of customers
at the best price-value on the market

According to Porter, strategies allow organizations to gain competitive advantage from three different
bases: cost leadership, differentiation and focus. Porter calls these bases generic strategies. Cost
leadership emphasizes producing standardized products at a very low per-unit cost for consumers who
are price-sensitive. Two alternative types of cost leadership strategies can be defined. Type 1 is a low-
cost strategy that offers products or services to a wide range of customers at the lowest price available
on the market. Type 2 is best-value strategy that offers products or services to a wide range of
customers at the best price-value available on the market. The best value strategy aims to offer
customers a range of products or services at the lowest price available compared to a rival's products
with similar attributes. Differentiation is a strategy aimed at producing products and services considered
unique industry wide and directed at consumers who are relatively price-insensitive. A low-cost focus
strategy offers products or services to a small range of customers at the lowest price available on the
market. A best-value focus strategy offers products or services to a small range of customers at the best
price-value available on the market.

(4) Name at least six reasons for performing mergers or acquisitions

 Increasing capabilities which are the extended innovative work opportunities
 Gaining a competitive advantage or larger market share where a company may want to expand
into different markets so they may merge w/ the other company.
 Diversifying products or services that is to complement a current product or service
 Replacing leadership to invest their money in something else
 Cutting costs when firms have the same products or services
 Surviving in which they are willing to give up their identity to another company