economics of organization and strategy 6

For this final SLP, imagine that your business has become successful and you are now considering expanding the scope of your company. Carefully review all of the required background materials, and then write a three-page paper answering the following questions. Make sure to cite at least one of the required readings for each of your answers:

1. If you were to engage in horizontal integration, which of your direct competitors would you decide to acquire? Overall, do you think horizontal integration is the best long-run plan for your business if it is successful?
2. Do you think your business should vertically integrate over time? Should you engage in backwards vertical integration, forward vertical integration, both, neither? Explain your reasoning.
3. How about diversification/conglomerate strategy? Any advantage to diversifying your business? Discuss unrelated diversification and related diversification and whether or not these strategies might be good for your business. Explain your reasoning.

Required Reading

To start off this module, take a look at the following video for a relatively comprehensive overview of several concepts from this module. This video is a little longer than previous videos you’ve watched for this class, but covers very useful information such as vertical and horizontal integration strategies as well as conglomerate (diversification) strategy:

Holden, P. (2011). Business integration – vertical, horizontal and conglomerate. St. Lawrence College. https://www.youtube.com/watch?v=gG9xNElFzRk

Now delve a little deeper into this subject with the following chapter that will reinforce what you’ve learned in the video plus some important additional concepts such as transaction costs:

Stengel, D. (2012). Economics of Organization. Managerial Economics Principles. Flat World Education http://saylordotorg.github.io/text_principles-of-managerial-economics/s05-economics-of-organization.html

Now read the following chapter for more detail on the concepts of vertical integration and horizontal integration. Also covered in this chapter is diversification strategy, also known as conglomerate strategy. Pay attention to the discussion of related versus unrelated diversification:

Ketchon, D. & Short, J. (2012). Chapter 8: Selecting corporate-level strategies. Strategic Management: Evaluation and Execution. Flat World Education. https://saylordotorg.github.io/text_mastering-strategic-management/s12-selecting-corporate-level-stra.html

 

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