Buy custom Strategic Advantages of Backward Integration
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Business
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| Number of pages / Number of words: |
2 / 488 |
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? Generates cost savings only if volume needed is big enough to capture efficiencies of suppliers
? Potential to reduce costs exists when
? Suppliers have sizable profit margins
? Item supplied is a major cost component
? Resource requirements are easily met
? Can produce a differentiation-based competitive advantage when it results in a better quality part
? Reduces risk of depending on suppliers of crucial raw materials / parts / components
Strategic Advantages of Forward Integration
? To gain better access to end users and better market visibility
? To compensate for undependable distribution channels which undermine steady operations
? To offset the lack of a broad product line, a firm may sell directly to end users
? To bypass regular distribution channels in favor of direct sales and Internet retailing which may
? Lower distribution costs
? Produce a relative cost advantage over rivals
? Enable lower selling prices to end users
Strategic Disadvantages of Vertical Integration
? Boosts resource requirements
? Locks firm deeper into same industry
? Results in fixed sources of supply and less flexibility in accommodating buyer demands for product variety
? Poses all types of capacity-matching problems
? May require radically different skills / capabilities
? Reduces flexibility to make changes in component parts which may lengthen design time and ability to introduce new products
Pros and Cons of Integration vs...
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? Generates cost savings only if volume needed is big enough to capture efficiencies of suppliers
? Potential to reduce costs exists when
? Suppliers have sizable profit margins
? Item supplied is a major cost component
? Resource requirements are easily met
? Can produce a differentiation-based competitive advantage when it results in a better quality part
? Reduces risk of depending on suppliers of crucial raw materials / parts / components
Strategic Advantages of Forward Integration
? To gain better access to end users and better market visibility
? To compensate for undependable distribution channels which undermine steady operations
? To offset the lack of a broad product line, a firm may sell directly to end users
? To bypass regular distribution channels in favor of direct sales and Internet retailing which may
? Lower distribution costs
? Produce a relative cost advantage over rivals
? Enable lower selling prices to end users
Strategic Disadvantages of Vertical Integration
? Boosts resource requirements
? Locks firm deeper into same industry
? Results in fixed sources of supply and less flexibility in accommodating buyer demands for product variety
? Poses all types of capacity-matching problems
? May require radically different skills / capabilities
? Reduces flexibility to make changes in component parts which may lengthen design time and ability to introduce new products
Pros and Cons of Integration vs...
Essay fragment
General points of the essay
ADVANTAGES OF VERTICAL INTEGRATION
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Determine The Primary Activities And Secondary Activities Of Your Organisation. Make A Conscious Decision On Whether Your Organization Should Compete By The Least Cost Strategy Or The Product Differentiation Strategy. Determine The Cost Drivers Of...
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