Vertical Growth Strategy

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1. How does horizontal growth differ from vertical growth as a corporate strategy? From concentric diversification? In simple words, horizontal growth is the expansion of a company into adjacent markets. A famous example of such a company is Amazon. After being successful at selling books, they started selling electronics and various other products in order to not only increase their profits, but also their market base and customer reach, fulfilling the needs and demands of the market. This can also be done by expanding into new and different geographic markets and locations. In business, horizontal integration is a strategy where a company creates or acquires production units for outputs which are alike - either complementary or competitive.…show more content…
This is like how Target started designing and sourcing its own clothes brands (like Cherokee, Massimo, Merona, etc.) instead of just relying on other manufacturers and brands to deliver their merchandise. This strategy is used by a company in order to gain control over its distributors and suppliers, it attempt to reduce transaction costs, increase the company’s power in the market and also to secure the supplies and distribution channels. There are 2 types of vertical growth strategies a firm can use: - Backward integration: This is where the firm gains control and ownership over its previous suppliers. - Forward integration: This is where the firm gains control and ownership over its previous…show more content…
Stability aims at stable growth. The firms using this strategy concentrate on the current product and market. It means remaining with the same business or same products and markets. The growth objective of such firms is that of modest one. Efforts are made to hold on to its current product-market position. The stability strategy is followed by those businesses, which are satisfied with their present position. This strategy is suitable in a simple and stable environment. Stability strategy implies continuing the current activities of the firm without any significant change in direction. If the environment is unstable and the firm is doing well, then it may believe that it is better to make no changes. A firm is said to be following a stability strategy if it is satisfied with the same consumer groups and maintaining the same market share, satisfied with incremental improvements of functional performance and the management does not want to take any risks that might be associated with expansion or growth. Stability strategy is most likely to be pursued by small businesses or firms in a mature stage of development. Stability strategies are implemented by ‘steady as it goes’ approaches to decisions. No major functional changes are made in the product line, markets or functions. However, stability strategy is not a ‘does nothing’ approach nor does it mean that goals such as profit growth are abandoned. The stability strategy can be designed to increase profits through such
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