Vertical integration is a strategy where a company owns or controls suppliers, distributors, or retailers in their value chain. This allows the company to control costs and quality. Key benefits include avoiding supply disruptions, reducing costs by eliminating middlemen, and gaining economies of scale. However, significant capital investment is required and companies may lose focus on their core business. The case study discusses how companies like Netflix have successfully integrated vertically despite conventional wisdom favoring outsourcing. While outsourcing aims to leverage resources, examples show it can damage reputation and profits. Vertical integration provides opportunities to innovate and coordinate the supply chain.
COEPD - Center of Excellence for Professional Development is a primarily a Business Analyst and PMP Training Institute in the IT industry of India head quartered at Hyderabad. COEPD is expert in PMP Training and Business Analyst Training in Hyderabad, Chennai, Pune , Mumbai & Vizag. We offer PMP and Business Analyst Training with affordable prices that fit your needs.
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Center of Excellence for Professional Development
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COEPD - Center of Excellence for Professional Development is a primarily a Business Analyst and PMP Training Institute in the IT industry of India head quartered at Hyderabad. COEPD is expert in PMP Training and Business Analyst Training in Hyderabad, Chennai, Pune , Mumbai & Vizag. We offer PMP and Business Analyst Training with affordable prices that fit your needs.
COEPD conducts 4-day workshops throughout the year for all participants in various locations i.e. Hyderabad, Pune. The workshops are also conducted on Saturdays and Sundays for the convenience of working professionals.
For More Details Please Contact us:
Visit at http://www.coepd.com or http://www.facebook.com/BusinessAnalystTraining
Center of Excellence for Professional Development
3rd Floor, Sahithi Arcade, S R Nagar,
Hyderabad 500 038, India.
Ph# +91 9000155700,
helpdesk@coepd.com
Diversification strategy ( megha and rakesh)Rakesh Kumar
this ppt is regarding how a company or business can use strategy of diversification its business.there are basically two types of diversification strategy which are adopt by business.
People looking out for International Trade theories, This Porters Diamond will be a useful presentation for you!... If requested on mail i will send you any particular Topic in International Business.
All the Best!
This slide is about PESTEL analysis. In this slide professionally discuss on PESTEL analysis. Briefly, analyse about PESTEL so one can easily understand and easily implement on the desired area.
Diversification strategy ( megha and rakesh)Rakesh Kumar
this ppt is regarding how a company or business can use strategy of diversification its business.there are basically two types of diversification strategy which are adopt by business.
People looking out for International Trade theories, This Porters Diamond will be a useful presentation for you!... If requested on mail i will send you any particular Topic in International Business.
All the Best!
This slide is about PESTEL analysis. In this slide professionally discuss on PESTEL analysis. Briefly, analyse about PESTEL so one can easily understand and easily implement on the desired area.
Operational Differences in International CompaniesResourcesDep.docxhopeaustin33688
Operational Differences in International Companies
Resources
Depending on whether a firm produces tangible (products that require manufacturing or processing) or intangible goods (services), its resource requirements will differ greatly.
Production management of tangible goods requires supply chain management to acquire production materials in the most efficient and cost-effective manner possible. The successful management of a firm's supply chain utilizes a defined set of process and steps to acquire the resources necessary for production. This may also require operations managers to decide the degree to which they can or should use vertical integration to optimize supply chain efficiencies. Vertical integration is the degree to which a firm decides to use its own resources (by making them) or to purchase the resources from an external supplier. If a firm decides to make the resources it needs to produce its end product, it may purchase a supplier firm and take the resource production "in-house" (Backward Vertical Integration).
If a firm decides it would be best to distribute their products themselves, rather than lose the profit margins to a distributor, they may desire to purchase a distributorship and move that function "in-house" (Forward Vertical Integration).
Conversely, firms may decide that the best efficiencies for production and pricing occur when they purchase their resources for production. In this case, procurement operations are a critical facet of ensuring that resources are purchased at the most favorable terms possible. In the international marketplace, this function relies on strong multinational communications techniques and continual foreign currency analysis in order to optimize pricing. These operational decisions are complex and require astute business analysisLocation
When determining the location for an international firm's various facilities, operations managers must consider:
Country-related issues
· Resource availability - abundance and quality of workforce, raw materials, clean water, etc.
· Cost - prohibitive or supportive of locating a business in that location
· Infrastructure - technology, transportation systems, regulations
· Branding - various nations have brand images associated with them that can either enhance or diminish brand reputation
Product-related issues
· Transportation costs relative to the weight of the product can impact profitability such that a specific location is not suitable for production.
· Appropriate and efficient facility size (relative to anticipated product sales)
Government policies
· The decision to locate a facility in a foreign nation is greatly impacted by the stability of the political system.
· Tariffs and taxes can force firms to locate a facility within the borders of a nation.
· Location decisions can be influenced by economic incentives offered by certain host nations.
Operational issues
· Firms that have a low-cost strategy may locate in low-cost locations, but a f.
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When most people in the industry talk about online or digital reputation management, what they're really saying is Google search and PPC. And it's usually reactive, left dealing with the aftermath of negative information published somewhere online. That's outdated. It leaves executives, organizations and other high-profile individuals at a high risk of a digital reputation attack that spans channels and tactics. But the tools needed to safeguard against an attack are more cybersecurity-oriented than most marketing and communications professionals can manage. Business leaders Leaders grasp the importance; 83% of executives place reputation in their top five areas of risk, yet only 23% are confident in their ability to address it. To succeed in 2024 and beyond, you need to turn online reputation on its axis and think like an attacker.\
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E-commerce in 2024 is characterized by a dynamic blend of opportunities and significant challenges. Supply chain disruptions and inventory shortages are critical issues, leading to increased shipping delays and rising costs, which impact timely delivery and squeeze profit margins. Efficient logistics management is essential, yet it is often hampered by these external factors. Payment processing, while needing to ensure security and user convenience, grapples with preventing fraud and integrating diverse payment methods, adding another layer of complexity. Furthermore, fulfillment operations require a streamlined approach to handle volume spikes and maintain accuracy in order picking, packing, and shipping, all while meeting customers' heightened expectations for faster delivery times.
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Everyone knows the power of stories, but when asked to come up with them, we struggle. Either we second guess ourselves as to the story's relevance, or we just come up blank and can't think of any. Unlocking Everyday Narratives: The Power of Storytelling in Marketing will teach you how to recognize stories in the moment and to recall forgotten moments that your audience needs to hear.
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Mastering Local SEO for Service Businesses in the AI Era is tailored specifically for local service providers like plumbers, dentists, and others seeking to dominate their local search landscape. This session delves into leveraging AI advancements to enhance your online visibility and search rankings through the Content Factory model, designed for creating high-impact, SEO-driven content. Discover the Dollar-a-Day advertising strategy, a cost-effective approach to boost your local SEO efforts and attract more customers with minimal investment. Gain practical insights on optimizing your online presence to meet the specific needs of local service seekers, ensuring your business not only appears but stands out in local searches. This concise, action-oriented workshop is your roadmap to navigating the complexities of digital marketing in the AI age, driving more leads, conversions, and ultimately, success for your local service business.
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Disclaimer: Some of the prompts mentioned here are the examples of Matt Diggity. Please use it as reference and make your own custom prompts.
2. MEANING
• Vertical integration is a strategy whereby a company owns or controls its
suppliers, distributors, or retail locations to control its value or supply chain.
• Vertical integration benefits companies by allowing them to control the
process, reduce costs, and improve efficiencies. However, vertical
integration has its disadvantages, including the significant amounts of
capital investment required.
• Businesses are always looking for methods to reduce costs and control the
quality of the products and services they provide. A company is able to
create a competitive advantage by integrating different stages of its
production process and supply chain into their business. This is called
vertical integration.
3. EXAMPLES OF VERTICAL INTEGRATION
Netflix is a prime example of vertical integration
whereby the company started as a DVD rental
company supplying film and TV content. The
company's executive management realized they could
generate more revenue by shifting to original content
creation.
Today, Netflix uses its distribution model to promote
their original content alongside films from major
studios.
4. Another example of vertical integration
A company that is vertically integrated is Target, which has its own store
brands and manufacturing plants. They create, distribute, and sell their
products—eliminating the need for outside entities such as
manufacturers, transportation, or other logistical necessities.
Manufacturers can also integrate vertically. Many footwear and apparel
companies have a flagship store that sells a wider range of their
products than are available from outside retailers. Many also have outlet
stores that sell last season's products at a discount.
6. ADVANTAGES
• A vertically integrated company can avoid supply disruption. By
controlling its own supply chain, it is more able to control and deal
with any supply problems itself.
• A company benefits by avoiding suppliers with market power.
These suppliers are able to dictate terms, pricing, and availability of
materials and supplies. When a company can circumvent suppliers
such as these, it is able to reduce costs and prevent production slow-
downs caused by negotiations or other aspects external to the
company.
7. • Vertical integration gives a company better economies of scale. Large
companies employ economies of scale when they are able to cut costs while
ramping up productions—they take advantage of their size. For example, a
company could lower the per-unit cost by buying in bulk or by reassigning
employees from failing ventures. Vertically integrated companies
eliminate overhead by consolidating management and streamlining
processes.
• Companies keep themselves informed on their competition. Retailers
know what is selling well. If a company was vertically integrated with a
retail store, manufacturing plant, and supply chain, they would be able to
create "knock-offs" of the most popular brand-name products. A knock-off
is a copy of a product—a similar product but company-branded with
company marketing messages and packaging. Only powerful retailers
can do this. Brand-name manufacturers can't afford to sue for copyright
infringement, as they would risk losing major distribution through a large
retailer.
8. • Lower pricing strategies can be used. A company that's vertically
integrated can transfer the cost savings they create to the consumer.
Examples include Best Buy, Walmart, and most national grocery store
brands.
9. DISADVANTAGES
• The biggest disadvantage of vertical integration is the
expense. Companies must invest a great deal of capital to set up or
buy factories. They must then keep the plants running to maintain
efficiency and profit margins.
• Vertical integration reduces a company's flexibility by forcing them
to follow trends in the segments they integrated. Suppose a company
acquired a retailer for their product and created an outlet store that
carried the old merchandise as well. That retailer's competition began
using a new technology which boosted their sales. The new parent
company would now need to acquire that technology to stay relevant
in that market.
10. • Another problem is the loss of focus. Running a successful retail
business, for example, requires a different set of skills than a profitable
factory. It's difficult to find a management team that's good at both.
Integration can cause management to focus less on their core
competencies, and more on the newly acquired assets.
• Culture class is an issue. It's also not likely that any company will
have a culture that supports both retail stores and factories. A
successful retailer attracts marketing and sales types. This type of
culture isn't responsive to the needs of factories and the clash can lead
to misunderstandings, conflict, and lost productivity.
11. CASE STUDY ON VERTICAL INTEGRATION
1. Source- Journal of Business Case Studies – July 2008
2. Title- A Case Series Of Today’s Vertical Integration
3. Authors- Steven R. Clinton, Robert Morris, Robert Gayle Marco
4. Year- July,2008
12. ABSTRACT OF CASE STUDY
In today’s business environment outsourcing attracts considerable
attention. The general rationale is that anything that is not a core
competency of the firm is a candidate for outsourcing. The touted
benefits are generally considered to be substantial cost savings, better
productivity and more strategic use of scarce resources within the firm.
In contrast, vertical integration has to some degree come to be viewed
somewhat negatively – the argument being that no single firm in today’s
competitive environment can possibly – or should – manage an
extended enterprise. But as this series of case studies show, some firms
are flourishing by going against prevailing logic and vertically
integrating their supply chains.
13. Conclusion of the case study according to me
While outsourcing is designed, in part, to safeguard and leverage scarce
resources, recent examples in the toy and pet food industries clearly
illustrate the risks associated with this practice. Damage to carefully
crafted firm reputations as well as the bottom line draw into question
how much outsourcing actually saves an organization. In contrast,
vertical integration and its extension of the firm’s reach is often
portrayed as the lumbering giant wasting shareholder wealth by
performing tasks that can be done – presumably – more efficiently
outside the firm. But as these cases illustrate there is still a place for
carefully considered vertical integration. Whether it be synergistic
applications of complementary software or innovations by front line
workers and engineers, vertical integration can still work in today’s
environment and boost the bottom line.
14. Benefits which I noticed after going through
the Case Study
1. Reduces transportation costs if common ownership results in closer
geographic proximity.
2. Improves supply chain coordination.
3. Provides more opportunity to differentiate by means of increased
ownership over inputs.
4. Captures upstream and downstream profit margins.
5. Gains access to downstream distribution channels that otherwise
would be inaccessible.