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Chapter 9
CORPORATE-LEVEL STRATEGY
Business Business
& industries
9-5
Repositioning &
Redefining A Business Model
Corporate-level strategies primarily directed toward improving
company’s competitive advantage and profitability in present
business or product line.
Horizontal Integration- acquiring/merging with
industry competitors
Vertical Integration- expanding operations
backward into industry that produces inputs for
company or forward into industry that distributes
company’s products
Strategic Outsourcing- letting some value
creation activities within business be performed
by independent entity
9-6
Horizontal Integration:
Single-Industry Strategy
Process of acquiring/merging with industry competitors in
effort to achieve competitive advantages that come with large
scale & scope.
Staying in single industry allows firm to:
Focus resources- resources devoted
to competing successfully in one area
‘Stick to the knitting’- company
stays focused on what it does best
2010 South-Western/Cengage Learning. All Rights Reserved. May
not be copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for classroom 9-7
Benefits of Horizontal
Integration
Profits/profitability increase if horizontal integration:
Figure 9.1
Figure 9.2
Company-owned suppliers
lack incentive to reduce costs
Changing demand/technology
reduces ability to be competitive
Figure 9.3
2010 South-Western/Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or 9-18
otherwise on a password-protected website for classroom use.
Benefits of Outsourcing
1. Lower cost structure- specialist cost is less than
performing activity internally
2. Enhanced differentiation- quality of activity
performed by specialist is greater than if activity
were performed by the company
3. Focus on the core business
• Distractions are removed
• Company can focus attention/resources on activities
important for value creation/competitive advantage