Mc 203 strategy

1. Presentation on topic :
Concentration and Integration
Strategies.
Presented by : Sangeeta Saini
M.Com (p)
641

2. Corporate growth strategies.
Types of growth strategies.
1. Concentration strategies.
2. Integration strategies.
a) Horizontal strategies.
b) Vertical strategies.
Conclusion .

3. Corporate growth strategies
 Growth is a way of life . Almost all the organisations plan to expand .
Growth strategy is commonly used when a product is introduced or
moves through the rapid growth phase of product life cycle.
1. In industry which are subject to frequent change in technology and
other conditions , growth is necessary for survival.
2. Growth offers many economies because of large scale operations.
3. Some believes that society benefits from growth strategies.
4. Growing companies have high level of prestige in the corporate
world.
5. Increasing size may lead to more control over the market vis a vis
competitors.

4. Types of
growth
strategies
Concentration
strategies
Diversification
strategies
Integration
strategies

5. Concentration strategies
These are also known as intensification or
focus strategy . Under this strategies, the
corporate adopted the philosophy that doing
what the company know they are best at
doing. The objective of concentration
strategy is to expand the organisations
present business.
Example : TV , Refrigerator etc.

6. Concentration strategies

7. • In market penetration, an organisation tries to capture market
share in the existing product and aims at expanding its business
at a rate higher than industry growth.
• Market penetration involves selling more products to the same
market.
Market
penetration
• In market development attempt is made to increase sales by
developing new markets. It may try to attract new users for
existing products.
• It involves selling the existing products to new markets.
Market
development
• In this , efforts are made to achieve growth through product
innovation.
• It involves selling new product to the same market.
Product
development
• It involves selling a new product to new market.Diversification

8. Concentration strategies
Advantages
 Managers faces less
problem dealing with
known situations.
 Concentration involves
minimal organisational
changes , so it is less
threatening , the
managers of a firm are
more comfortable with
the present businesses.
Disadvantages
 Concentration strategies are
heavily dependent on one
industry. Adverse conditions
in an industry affect the firm
if they are intensely
concentrated.
 Factors such as product
obsolescence and
emergence of newer
technologies are threats to
concentrated firms.

9. Integration strategies
Integration means combining activities
related to the present activities of the firm .
Integration strategies have two types:
Horizontal
integration
strategies.
Vertical
integration
strategies

10. Horizontal integration strategies
It is a process of a company increasing production of goods
or services at the same part of supply chain .the company
may do this via internal expansion and external expansion
(merger or acquisition).
The Purpose of horizontal integration is to grow the
company size, increase product differentiation, achieve
economies of scale, reduce competition and access market
share.

11. Examples of horizontal
integration strategies
Acquiring company Acquired company
Microsoft Yahoo !
Delta Northwest airlines
HP Compaq

12. Advantages of horizontal
integration
 Lower cost.
 Increased market power.
 Reduced competition.
 Access to new market.
Disadvantages of horizontal
integration
 Destroyed value.
 Legal restrictions
 Reduced flexibility.

13. Vertical integration
 Vertical integration is a strategy where a company
expands its business operations into different steps
on the same production path, such as when a
manufacturer owns its suppliers or distributors.
Vertical integration can be of two types:
Forward vertical
integration
Backward
vertical
integration

14. Forward integration
In which the organisation develops outlets
for the use/sale of its product. For example :
TV picture tube manufacturing organisation
going for manufacturing of TV sets.
Additional processing is under taken in
reverse direction. For example : TV sets
manufacturing organisation is going to
manufacture TV tubes.

15. Forward and backward integration

16. Advantages of vertical
integration
 The organisation can save the cost of internal control and coordination.
 The integrated organisation can save the cost of selling and
transactions.
 The integrated organisation can have economies of information.
 Vertical integration assures the organisation that it will receive
supplies in tight periods.
Disadvantages of vertical integration
 Low flexibility.
 Huge capital investment requirements.
 Problem in maintaining balance.

17. Conclusion
In short, a growing economy , expanding
markets , customers seeking new ways of
need satisfaction and emerging technologies
offer ample opportunities for companies to
seek expansion . Expansion is possible when
we adopts the growth strategies.