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Overview of integration
- 1. OVERVIEW OF INTEGRATION Presentedby : Bharath Somashekar MBA 1 year B Section
- 2. MEANING OF INTEGRATION “THE PROCESS OF COMBINING TWO OR MORE THINGS INTO ONE ” . TYPES OF INTEGRATION 1 . HORIZONTAL INTEGRATION 2 . VERTICAL INTEGRATION
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- 4. HORIZONTAL INTEGRATION • HORIZONTALINTERGRATION IS THE ADDITION OF OTHER BUSINESS ACTIVITIES AT THE SAME LEVEL OF THE VALUE CHAIN . • TWO COMPANIES OF THE SAME INDUSTRY AND IN THE SAME STAGE OF PRODUCTION WORK TOGETHER . • THESE COMPANIES BELONG TO SUPPLY CHAIN STAGE AND NORMALLY PRODUCE OR TRADE THE SAME PRODUCT . • FIRM ADD THEIR STRENGTH TO GAIN BENEFIT .
- 5. EXAMPLES: • THE STANDARDOIL COMPANY BUYING 40 REFINIERIES • AN AUTOMOBILE MANUFACTURER BUYING A SPORT UTILITY VECHILE MANUFACTURER • A RADIO STATION THAT ALSO OWNS A NEWSPAPER AND MAGAZINE.
- 6. TWO OPTIONS 1 .ACQUISTION Acquisition is the purchase of another company. 2 . MERGER Merger is the joining of two similar sizes, independent companies to make one joint entity.
- 8. HORIZONTAL COOPERATION • EXAMPLE:VW SHARAN AND FORD GALAXY • SET UP A COMPLETELY NEW COMPANY • LEGALLY INDEPENDENT • COMPANIES GIVE THEIR RESOURCES TO THE NEW FOUNDED JOINT VENTURE • DEVELOPMENT AND PRODUCTION IDENTICAL • THE MAIN AIM IS CUTTING DOWN COSTS
- 10. VERTICAL INTEGRATION VERTICAL INTEGRATIONIS A COMPETATIVE STRATEGY BY WHICH A COMPANY TAKES COMPLETE CONTROL OVER ONE OR MORE STAGES IN THE PRODUCTION OR DISTRIBUTION OF A PRODUCT .
- 11. 3 TYPES OFVERTICAL INTEGRATION 1 . BACKWARD (UPSTREAM) VERTICAL INTEGRATION : THIS IS WHEN A COMPANY OWNS SOME OF THE SUBSIDIARIES THAT PRODUCE SOME OF THE USED IN THE PRODUCTION OF IT’S PRODUCTS . 2 . FORWAR VERTICAL INTEGRATION : THIS IS WHEN A COMPANY OWNS THE SUBSIDIARIES THAT MARKET THE PRODUCT . 3 . BALANCED VERTICAL INTEGRATION : A COMPANY THAT SETS UP SUBSIDIARIES THAT SUPPLY THEM WITH INPUTS AS WELL AS MARKET THEIR PRODUCT .