Forward Integration

A business strategy that involves a form of vertical integration whereby activities are expanded to include control of the direct distribution of its products Example

Natural health care products company Comvita purchased its Hong Kong distributor GreenLife Ltd. for NZ$9.03 million in 2007. Comvita's chairman indicated the forward integration with GreenLife's retail stores, sales staff, and in-store promoters would allow the firm to quickly and effectively launch new products into the Asian market. Comvita had undertaken a similar acquisition in the United Kingdom two years earlier in order to expand into the European Union.

Backward Integration
A form of vertical integration that involves the purchase of suppliers in order to reduce dependency Example
Pepsi co in India is in food processing. As a step to cut cost, they have started procuring agriculture produce eliminating vendors.

MDH spices needs millions of spices packs.They have set up offset printing to cut cost of final product

Horizontal Integration
Merger of firms at the same stage of production in the same or different industries. When the products of both firms are similar, it is a merger of competitors. When allproducers of a good or service in a market merge, it is the creation of a monopoly. If only a few competitors remain, it is termed an oligopoly.
example of horizontal integration is the GAP Inc. retail clothing corporation which controls Banana Republic, GAP and Old Navy. This enables GAP Inc. to cater to different customer needs without having to compete with either Banana Republic and Old Navy.

market penetration
Increasing market share of an existing product, or promoting a new product, through strategies such asbundling, extensive advertising, lower prices, or volume discounts. Example: The low pricing of zong when it was launched earlier to attract customers.

market development
Expansion of the total market served by a firm by (1) entering new segments of the market, (2) converting non-users into users, and/or (3) increasing usage per user.

Example

when Coca-Cola took their products to Russia, that was an example of market development since the market potential for Coca-Cola increased.

product development
Creation of products with new or different characteristicsthat offer new or additional benefits to the customer. It may involve modification of an existing product or itspresentation, or formulation of an entirely new product that satisfies a newly defined customer want or market niche.

Example: Launch of fanta lemon in Pakistan

retrenchment strategy
A strategy used by corporations to reduce the diversity or the overall size of the operations of the company. This strategy is often used in order to cut expenses with thegoal of becoming a more financial stable business. Typically the strategy involves withdrawing from certain markets or the discontinuation of selling certain products or service in order to make a beneficial turnaround.

Example: Launch of fanta lemon in Pakistan and then stopping its further production as a result of a failure.

RELATED DIVERSIFICATION
Diversification is RELATED when a firm has several lines of business that, although distinct, possess some kind of STRATEGIC FIT Example: Pepsico investing in the production of mineral water aqua fina.

UNRELATED DIVERSIFICATION
Unrelated diversification involves NO y Common linkage of strategic fit among a diversified firm s lines of business

Meaningful value chain interrelationships

Example: Nishat being a textile business entity investing in power houses.

cost leadership
Strategy used by businesses to create a low cost ofoperation within their niche. The use of this strategy is primarily to gain an advantage over competitors by reducing operation costs below that of others in the same industry.

Example: Ptcl providing low rate faster DSL connections.

Joint venture strategy:

New firm formed to achieve specific objectives of apartnership like temporary arrangement between two or more firms. JVs are advantageous as a risk reducingmechanism in new-market penetration, and in pooling ofresource for large projects. They, however, present uniqueproblems in equity ownership, operational control, anddistribution of profits (or losses). Research indicates that two out of five JV arrangements last less than four years, and are dissolved in acrimony. See also strategic alliance.

Example:
The Babcock and Wilcox power generation group of OHIO (USA) has signed a ninety million dollars contract with Saba Power Co. Ltd. of Lahore to construct and commission a 125 megawatts oil-fired power plant near Lahore. The new facility will be located near Farouqabad, sixty kilometers Northwest of Lahore. Saba Power Company, an independent power producer in Islamabad, will own the highefficiency plant and supply power to water and power development authority.

mergers and acquisitions

Area of banking or financing that deals with funding ofacquisitions, mergers, and takeovers. It is usually an area of specialty of corporate lawyers, merchant banks, and stockbrokerage firms.

Example:
Acquisition of 100% stake and management control in AES Pak Gen (Pvt) Company by a consortium comprising of Nishat Mills Limited, Adamjee Insurance Company Limited, Security General Insurance Company Limited, Mr. Hassan Mansha, Stanhope Investments and Eengen (Pvt) Limited.

Strategic HRM Assignment #3 Submitted By: saad masud (L1S10MBAM1240) Submitted to: Farooq Jam