Vertical Integration Case Study

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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.
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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
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Conversely, portfolio analysis is conducted at market level by evaluating the performance of a portfolio of stocks. Additionally, the purpose of portfolio analysis is to improve investments whereas SWOT analysis is used to enhance the performance of a business. Moreover, SWOT analysis are obtained through both quantitative and qualitative data and relies heavily on assumptions. On the other hand, portfolio analysis is strictly based on quantitative (financial and economic) data. Finally, SWOT analysis is mainly useful for generating strategic ideas for business growth and is used by most firms whereas portfolio analysis is only useful to businesses that own stock and have their own investments in other firms.
5. How is corporate parenting different from portfolio analysis? How is it alike? Is it a useful concept in a global industry?
The basis differs between these two approaches to corporate strategy lies in the question they attempt to answer. Portfolio analysis helps find solutions to the following problems:
• How much of our time and money should we spend? On our best products and
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