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Advantages and Disadvantages of Vertical and Horizontal Integration - Essay Example

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This paper examines the concept of expansion through vertical and horizontal integration. These two concepts are very crucial in that they provide significant business modelling systems and tools that can determine the main structures of the business…
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Advantages and Disadvantages of Vertical and Horizontal Integration
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Download file to see previous pages One of the most important elements of businesses is survival. For a business to thrive through different timelines and periods, there is the need for businesses to find ways and means of remaining profitable (Kotler, 1994). This implies that businesses will need to modify their ways of production and find ways and means of keeping their customers satisfied. Aside customer satisfaction, businesses also need to stay ahead of other players in the industry by remaining competitive.
Survival of a business is strongly linked with its ability to grow. There is a popular saying that one needs to evolve or become extinct. This implies that businesses need to find ways and means of growing and expanding to meet these evolutional needs.
Due to the complex nature of businesses and the complications that can come up when a business is expanding, there are numerous approaches through which a business can expand by way of acquiring other businesses. The use of acquisition and mergers comes with so many business and managerial requirements that must be examined closely at each and every point to ensure that optimum results are attained.
The paper attempts an in-depth application of the concept of mergers and acquisitions to businesses in the technological sector. It examines the advantages and disadvantages of vertical integration and horizontal integration in the technological sector....
Hill & Jones (2010) identify that there are four main reasons why a business might choose to ‘reposition’ itself. In other words, a business might want to change its structures and systems through various means of acquisitions or control of other ventures that are closely related to it. According to Hill & Jones (2010), the first reason why a business might want to reposition itself is for the purposes of improving the company’s competitive position. In other words, the business might want to become much more formidable in maintaining its share in the control of valuable resources like the markets and/or the inputs that are used for production in the industry. Secondly, a business might want to improve its profitability situation. In other words, businesses might want to increase their earning powers and control more income or revenue streams through some expansion or re-positioning exercise. Thirdly, a business might want to enhance production. In other words, a business might want to find efficient and effective ways of producing the same thing. In this wise, they might seek to produce more from a given volume of inputs or increase the volume of production they undertake. Finally, a business might want to diversify so that they reduce risks and enhance returns. This might be done through the controlling of different income generation sources rather than a single or fewer income generation streams. This is done through various techniques like the creation of new business units or new products which can provide value to consumers and in effect provide some more revenue for the company. In this wise, the business will not have to rely excessively on a single income generation unit which ...Download file to see next pagesRead More
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