Strategy

Chapter 5: Corporate Level Strategy

1. Provide and talk about an example of a firm that you think has successfully implemented a vertical integration strategy (other than those in the book).

A firm that has implemented the vertical integration strategy is one which I worked at before, Samsung Electronics. Although Samsung is a large business house with around 80 businesses ranging from electronics, auto, finance, insurance, textiles, construction etc. But within its electronics business, Samsung has been able to implement vertical integration. The way this strategy was implemented was by investing in manufacturing of components that would become part of popular electronic products. Samsung invested in flash memory, display and chip development hardware R&D as well as manufacturing. Soon it became the biggest supplier of these components. Later Samsung utilized knowledge gained from manufacturing to develop expertise in these areas and started coming up with basic products of its own. In the beginning Samsung used suppliers to come up with the final product. But as soon as it would gain some expertise it would replace the supplier with a team of its own. The cycle of product development was expedited to come up with more and more products of lots of variety. At present Samsung remains a supplier of components but is also developing products of its own and capturing the respective market share.

2. Diversification is risky. Most organizations would be better off not diversifying at all. [Arguing against]

Though diversification is risky but there are certainly rewards associated with it. Diversification is a kind of evolution which is necessary to remain competitive in today's marketplace. A very significant example is of IBM which started as a manufacturer of computing and business machines, slowly diversified into services business and transformed into a services company. As companies grow in their specific competence, they encounter...